Developer Convicted of Laundering $1.2 Billion in Illicit Funds Through Cryptocurrency

Russian crypto developer Alexey Pertsev, the mind behind the now-sanctioned Tornado Cash Crypto Mixer, has been found guilty of laundering more than $1.2 billion in illicit funds through his platform.

Living in the Netherlands, Pertsev, aged 31, has been sentenced to 64 months in prison by a Dutch court, with the option for his lawyers to appeal within 14 days.

The saga began in 2022 when Tornado Cash faced sanctions from the US, leading to Pertsev’s initial imprisonment in the Netherlands.

The US Treasury accused Tornado Cash of aiding the notorious North Korean hacking group, Lazarus, in their illicit activities.

During the trial, prosecutors acknowledged that Pertsev had not taken sufficient measures to prevent criminals from utilizing Tornado Cash for nefarious purposes. They argued that the platform had become a conduit for illegal funds.

In his defense, Pertsev’s legal team pointed out that Tornado Cash operates on open-source and automated smart contracts. They argued that blaming Pertsev for the actions of anonymous users was unjust, likening it to holding a knife or car manufacturer accountable for the actions of their users.

Industry commentators, including Raphaël Bloch, co-founder of ‘The Big Whale,’ echoed this sentiment, warning against the dangerous precedent set by Pertsev’s conviction. They emphasized that Pertsev merely developed a tool, and condemning him could have far-reaching consequences.

The outcome of Pertsev’s trial could impact other pending cases involving developers accused of similar offenses, such as Roman Storm and Roman Semenov. Storm’s trial is scheduled for September, while Semenov remains at large. Former NSA whistleblower Edward Snowden had previously advocated for support for Storm’s legal defense.

In response to Pertsev’s conviction, Pablo Sabbatella, Head of Security Research at Blockfence, lamented the implications for open-source projects and the crypto community.

It’s important to note that Tornado Cash operates as a non-custodial crypto mixing protocol, meaning it never holds or controls the funds transferred through it. The Lazarus Group, allegedly linked to the North Korean government, attracted attention for allegedly utilizing Tornado Cash in its cyber activities.