The Oost-Brabant District Court in the Netherlands has sentenced Alexei Burtsev, co-developer of popular cryptocurrency mixing tool Tornado Cash, to 64 months in prison for his role in creating and maintaining the platform.
The court alleges that Tornado Cash enables “criminal activity and terrorism” by concealing the origin, destination and ownership of cryptocurrency transactions.
Tornado Cash developer was sentenced to 5 years and 4 months in prison
Burtsev, along with two others, developed Tornado Cash to provide privacy solutions to the cryptocurrency community. However, the court's investigation revealed that the tool facilitated the laundering of approximately $1.2 billion to $2.2 billion in Ethereum (ETH), derived from numerous thefts and hacks.
Although Burtsev asserted that Tornado Cash was not designed to facilitate criminal activities, the court determined that the tool was actively used for money laundering. The court stressed that Burtsev and his co-founders were responsible for the operation of Tornado Cash and its “lack of measures to prevent misuse,” noting that they developed it with full knowledge of its potential for illicit use.
Tornado Cash dev ruled that it is liable for all illegal uses, despite being unable to prevent it‼️ We will analyze both the ruling itself and the insanity of the precedent set here by the case against Alex Pertsev, developer and co-founder of Tornado Cash dev. @Tornado Cash Project 🧵 pic.twitter.com/wRycZZGiBk
— Freedom.Tech (@freedomtech) May 14, 2024
A cryptocurrency mixer, also known as a cryptocurrency tumbler, is a service that mixes different transactions to hide the origins and destinations of cryptocurrency assets. This process enhances privacy and anonymity for users by cutting the link between the sender and receiver of the transaction.
The court noted that nearly $450 million in cryptocurrencies, stolen by North Korean hacking group Lazarus in the “Axie Infinity hack,” were transferred via Tornado Cash and laundered, underscoring “the significant value of the tool to the criminal underworld.”
In addition to the prison sentence, the court decided not to return the Porsche seized by Burtsev and approximately 1.9 million euros in cryptocurrencies.
The first releases of Tornado Cash started in 2022 when the platform was blacklisted in the United States.
Below is a list of Tornado Cash resources that have been blocked – Tornado Cash @github Organization – personality @github TC Shareholder Accounts – All USD/USD On Tornado Cash contracts @circlepay – @infura_io RPC- @AlchemyPlatform RPC- https://t.co/SHvgEjTOMV specialization @eth_limo
— 🌪️ Tornado.cash 🌪️ (@TornadoCash) August 9, 2022
Separate case in the United States
Roman Storm, another co-founder of Tornado Cash, was arrested in the US last year, while a third co-founder, Roman Semenov, remains on the run and faces money laundering charges.
Finance Magnates reported in August 2023 that Storm was charged in the United States with helping criminals, including hackers linked to the North Korea-linked Lazarus Group, launder more than $1 billion in illicit funds. The FBI arrested Storm in Washington.
The US Department of Justice charged Semenov with conspiracy to commit money laundering, violating sanctions, and operating an unlicensed money transfer company. According to the agency, executives have received complaints and calls from victims of cybercrimes. However, they have deliberately avoided implementing controls to prevent criminals from using the platform to launder illicitly obtained cryptocurrencies.
Separately, the Treasury Department's Office of Foreign Assets Control (OFAC) He issued a sanctions list against Semenovafter a similar penalty was imposed on Tornado Cash last year.
This article was written by Damian Schmil at www.financemagnates.com.