“Tornado Cash, by its nature and operation, is a tool designed for criminals,” the judge said. The defense has two weeks to appeal the verdict.
According to the Dutch prosecutor’s office, at least $2.3 billion was laundered through Tornado Cash in 2019 – 2022 – over 30% of the service’s total transaction volume. Tornado Cash, co-created by Pertsev, shuffles user funds to reduce the trail of cryptocurrency transactions concluded on the Ethereum blockchain. It was Pertsev who in 2020 suggested that his fellow co-founders develop a standard response to victims of fraud who turned to Tornado Cash for help in returning stolen funds.
The co-founder of Tornado Cash, living in the USA, Roman Semenov (accused by the US Treasury Department of criminal conspiracy to launder funds and violate sanctions, is at large) proposed a draft answer, from which it followed that Tornado Cash works on the Ethereum blockchain, which is beyond the control of the cryptomixer, and not on a server owned by the team.
“It is a decentralized software protocol that cannot be controlled by any single entity. Thus, we cannot provide assistance on issues related to the Tornado Cash protocol,” says the message that people who contacted the cryptomixer’s support service began to receive. Two days later, hackers associated with the DPRK government withdrew about $275 million worth of cryptocurrencies from the KuCoin exchange and redirected some of the funds to Tornado Cash to cover their tracks.
Pertsev is accused of creating a decentralized service, the principle of which is to copy code into thousands of Ethereum nodes storing the blockchain. This mechanism, implemented on the basis of a decentralized smart contract, supposedly does not allow the owners of Tornado Cash to identify or control users of the service, thanks to which the latter can hide the origin and purpose of their funds. The defendant’s defense, in turn, draws attention to the fact that the cryptomixer is a powerful tool for ensuring confidentiality.
Cryptocurrency circles believe that Pertsev’s conviction could not only harm financial privacy, but also set a dangerous precedent: Open source software developers could be held accountable for the actions of those who use their tools. Ethereum co-founder Vitalik Buterin publicly stated that he used Tornado Cash to anonymize donations to Ukraine after the start of the war with Russia. The volume of cryptocurrency passing through Tornado Cash reached its peak in the spring of 2022. According to Dutch law enforcement agencies, Pertsev earned $15 million by laundering funds through a cryptomixer and bought himself a Porsche.
The Dutch prosecutor’s office and the Fiscal Information and Investigation Service (FIOD) argued that the case against Pertsev is not related to a fundamental conflict between privacy and security or the liability of open source developers for the actions of third parties. According to law enforcement agencies, in this case we are talking about specific, conscious decisions of the defendant in the interests of cryptocurrency scammers. In addition, Dutch prosecutors believe that, despite the statements of the owners of Tornado Cash about the absolute confidentiality of transactions, they were still able to control the movement of funds.
The Tornado Cash trial will begin in New York court later this year. Roman Semenov and another co-founder of the cryptomixer, Roman Storm, will appear in court. The latter was arrested in 2023, but was released on bail. If convicted, a precedent will be created in US law. Pertsev’s sentence in the Netherlands will directly affect the outcome of the case in New York.
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