Alexey Pertsev, the creator of the cryptocurrency mixing protocol Tornado Cash, has been convicted of money laundering, which could have significant implications for developers of open-source code.
On May 14, Dutch judges at the s-Hertogenbosch Court of Appeal found Pertsev guilty of money laundering. He was sentenced to five years and four months in prison for allegedly laundering $1.2 billion worth of illicit assets using the platform.
This verdict is surprising considering Tornado Cash is a noncustodial crypto mixing protocol, meaning it does not hold or control the funds that pass through it.
Pertsev’s conviction follows his initial arrest in the Netherlands in August 2022, shortly after Tornado Cash was blacklisted by the United States government.
Pertsev’s legal team has 14 days to appeal the court’s decision.
In a previous indictment, it was claimed that Pertsev should have been aware of the illegal origins of some of the transactions on the platform he helped develop.
However, there is currently no evidence that Pertsev actively facilitated any criminal transactions, aside from his contribution to the open-source code of the crypto mixing protocol.
This case has raised concerns among open-source code developers, as it could establish a precedent for holding developers accountable for how criminals misuse their code.
During Pertsev’s previous trial in March, prosecutors argued that he did not implement sufficient safeguards to prevent illicit money laundering.
Authorities alleged that even notorious hackers like the North Korean state-backed Lazarus Group used the protocol for their criminal activities.
Lazarus Group is suspected of carrying out the record-breaking $625 million hack on Axie Infinity’s Ronin Bridge in March 2022.
It is believed that the group laundered over $455 million of the stolen funds through Tornado Cash, which has facilitated over $7 billion worth of crypto laundering since its launch in 2019, according to the U.S. Department of the Treasury’s Office of Foreign Assets Control.
Pertsev’s sentencing comes shortly after the arrest of the founders of Samourai Wallet. On April 24, it was reported that the CEO Keonne Rodriguez and CTO William Hill will face charges of conspiracy to commit money laundering and operating an unlicensed money transmitting business.
The United States’ treatment of Tornado Cash reflects a clear disregard for privacy, according to Amanda Tuminelli, the legal chief of DeFi Education Fund.
The Department of Justice has challenged the motion to dismiss the charges against the co-founder of Tornado Cash, further complicating the situation.