Tornado Cash developer was arrested in the Netherlands on August 10 according to Dutch authorities.
A 29-year-old creator of Tornado Cash, a cryptocurrency mixer based on the Ethereum network and sanctioned earlier this month by the U.S. Treasury Department, was detained according to a report from the Dutch Crime Agency (FIOD).
The United States outlawed Tornado Cash because it had the potential to be used for massive amounts of money laundering loans and assisted some people connected to illegal activity conceal their assets.
The suspect is reportedly involved in offenses including the concealment of illegal financial flows and the facilitation of money laundering, claims the FIOD.
Tornado Cash Helped Launder Money
The FIOD observed that because these platforms are primarily used to promote anonymity in financial transactions, cryptocurrency mixers frequently assist in money laundering.
“Tornado Cash is a mixing service for cryptocurrencies. The online service makes it possible to conceal the origin or destination of cryptocurrencies. The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Users of a mixing service mostly do this to increase their anonymity.”
The FIOD has been looking into Tornado Cash since June 2022 because of its conceivable connections to illegal groups including the state-funded hacker group Lazarus. The fact that its governance choices are decided by consensus through a DAO (decentralized autonomous organization) with no central authority behind it makes it difficult to punish as a protocol.
Law enforcement authorities have been concerned about this as this year saw an all-time spike in the amount of criminal behavior associated with cryptocurrency mixers.
A number of voices in the cryptocurrency world who are advocates for data privacy denounced the news of the complaint about the Tornado Cash developer’s arrest, calling it an outrage against programmers who, despite writing code, do not have complete authority over the platform.
The arrest of this person was “disturbing news,” according to Stephan Livera, a host of a Bitcoin podcast and a contributor to Bitcoin Magazine. This is because currency mixers are not designed with illegal activity in mind, despite the fact that criminals utilize them.
Tornado Cash developer being arrested by Netherland’s FIOD is concerning news.
Imagine if road builders were being arrested “because criminals use them”? Or home curtain installers?
Wanting privacy should not be considered a crime.
— Stephan Livera (@stephanlivera) August 12, 2022
Livera made it unclear as to whether the developer had been detained in the first place because of his involvement in the Tornado Cash programming code or for some other reason. Similar worries were voiced by Tom Robinson, co-founder of the blockchain forensics company Elliptic.
Was the Tornado Cash developer arrested, not for writing code, but for knowingly acting as a relayer for proceeds of crime?https://t.co/Wvd3qSVM1v
— Tom Robinson (@tomrobin) August 12, 2022
The Tornado Cash developer was arrested in the Netherlands but questions still remain as to why. Is he innocent and blameless or did he participate in some of the illegal activities on his website? What will Dutch authorities do next? We will be following the story if it develops.
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