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  • K Kim and S Pettigrove

Tornado Cash accusations fly as software developers face trial

Alexey Pertsev, one of the software developers involved in the development of the software underpinning the sanctioned crypto mixing service, Tornado Cash, has been accused of laundering over USD$1.2B ahead of his Dutch criminal trial scheduled to begin on 26 March. The 3-page indictment issued by Dutch prosecutors alleges that between 9 July 2019 and 10 August 2022, Pertsev had:

at least in the Netherlands and/or in Russia and/or the United States and/or in Dubai, together and in association with one or more others, at least alone,... made a habit of committing money laundering

Pertsev has denied all allegations since being arrested in August 2022 shortly after a number of wallet addresses associated with Tornado Cash were sanctioned by the US Treaury's Office of Foreign Assets Control. After being detained for nearly 9 months, he is now monitored under a GPS tracker and faces a travel ban. 

The recent indictment identified 36 allegedly illicit transactions from decentralised protocols to the mixer, with the largest amount coming from the Ronin Bridge hack, responsible for over 175 ETH. Other illicit flows include hacked funds from the Harmony protocol and the Nomad Bridge. 

Separately, co-developers,

Roman Storm and Roman Semenov are awaiting their US trial, due to commence in September over alleged money laundering and sanctions violations.

The case against the Tornado Cash developers has sparked great controversy in the developer community, with concerns that the indicted developers had been prosecuted for their involvement in software development rather than dealing in illicit funds. Semenov likened the case to fights for online privacy in the early days of the web, with supporters advocating that developers should be able to

write open-source [code] and not be afraid that they will be put in jail

The Dutch prosecutors addressed this point in a statement to DL News:

A cryptocurrency mixing service is not inherently illegal

And clarified

Simply writing code is not punishable…mixing criminal assets and concealing the origin of criminal funds is punishable

With the continued controversy, all eyes are on Pertsev’s upcoming trial, including the details of the Dutch authorities' case. The forthcoming US and Dutch trials will not just test those allegations, but also define the boundaries of legitimate software development activities and developers' liability where that software facilitates illicit funds flows. 

Written by Kelly Kim and Steven Pettigrove


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