The recent conviction of Alexey Pertsev, the developer of Tornado Cash, a coin-mixing protocol, has sparked concerns about the broader implications for the crypto industry. Despite not being directly involved in the money laundering activities, Pertsev has been sentenced to five years and four months in prison by a Dutch court. This verdict has raised questions about the criminal liability of software developers who make their software available to the public.
Andrew Balthazor, a litigator from Holland and Knight, explained that Pertsev’s conviction reinforces the belief of several governments that software developers should be held responsible for the consequences of the public’s use of their software. This interpretation of liability deviates from the traditional understanding, where developers were seen as neutral creators of tools and platforms. However, now developers must consider the legal implications and potential misuse of their creations.
The crypto community has been quick to condemn Pertsev’s conviction, recognizing its significance. Eleonore Blanc, founder of CryptoCanal, expressed concerns about the broader implications of the trial, suggesting that this ruling could be applied to other use cases in the crypto industry. This sentiment was echoed by other community members who highlighted the potential dangers of this model of liability being applied outside the realm of software development.
Aside from privacy concerns, the ruling also poses risks to the immutability and decentralization of blockchain and smart contracts. Balthazor explained that this theory of liability makes it risky for developers to make immutable smart contracts available to the public. For example, stablecoin issuers may need to include features that blacklist blockchain addresses controlled by sanctioned entities to mitigate risks.
The punitive sentence handed to Pertsev has created anxiety among blockchain developers regarding potential legal action. Natalia Latka, director of public policy and regulatory affairs at Merkle Science, emphasized the importance of “compliance by design” for developers and organizations in the crypto space. This entails integrating regulatory compliance into the design and development process from the beginning to avoid legal repercussions.
However, the question remains: If developers have to compromise privacy, immutability, and decentralization to ensure compliance, what will be left of the blockchain?