Alexey Pertsev, one of the core software developers of the sanctioned crypto-mixer service, Tornado Cash, has been convicted of laundering over USD$1.2 billion and sentenced to 64 months in jail by a Dutch criminal court.
In the judgment (in Dutch) and the media release (in English) published by the court, the court labelled Tornado Cash as “no legitimate tool" that
combines maximum anonymity and optimal concealment techniques with a serious lack of functionalities that make identification, control or investigation possible.
The court rejected arguments that Tornado Cash was unintentionally abused by criminals, suggesting that it was created for criminal use only. It also found the defendant (and his co-developers) leveraged blockchains and DeFi and that Tornado Cash:
automatically performs the concealment acts that are needed for money laundering.
As for Pertsev's subjective state of mind in relation to the crimes, the court said he was aware that Tornado Cash was being used for money laundering - which the court called "common knowledge" - while he kept developing the software. The court also cited damning evidence in group chats discussing Ether hacks and how cryptocurrency with a criminal origin was deposited into Tornado Cash.
The court sentenced Persev to imprisonment for 5 years and 4 months. It also ruled that his Porsche and cryptocurrency worth 1.9 million euros, which had been seized, will not be returned to him.
Many fear that this judgement will set a dangerous precedent for software developers, including two other Tornado Cash co-developers Roman Storm and Roman Semenov, who are currently facing money laundering and sanction violation charges in the US.
Peter Van Valkenburg, the Director of Research at Coin Center (which previously sued the US Treasury Department over privacy concerns relating to their sanctioning of Tornado Cash), voiced disappointment with the judgement on X.
With Pertsev’s sentence, all eyes are now on the forthcoming US trials. The US Department of Justice recently filed a 111-page-long response rejecting the request to dismiss charges against Roman Storm, which is now headed for a jury trial.
The continuing legal battle will likely have broad ramifications for software developers as the US and Dutch governments seek to impose liability on Tornado Cash’s developers for the acts of third parties who exploited the autonomous smart contracts underpinning the protocol. The US trial will further define the boundaries of legitimate software development activities and developers' liability where that software facilitates illicit funds flows.
Written by J Huang, S Pettigrove and M Bacina
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