Alexey Pertsev, the creator of the popular cryptocurrency mixing protocol Tornado Cash, has been found guilty of money laundering. This verdict has raised concerns about the potential implications for open-source code developers. Pertsev was sentenced to five years and four months in prison for allegedly laundering $1.2 billion worth of illicit assets through the platform. It’s important to note that Tornado Cash is a noncustodial protocol, meaning it does not control or hold the funds that pass through it.
Despite the lack of control over the funds, Pertsev was still found guilty. This came after he was initially arrested in the Netherlands in August 2022, following the blacklisting of Tornado Cash by the United States government. Pertsev’s legal team will have 14 days to appeal the ruling.
The indictment against Pertsev suggests that he should have been aware of the illegal origins of some transactions on the platform he helped develop. There is no evidence that Pertsev actively facilitated criminal transactions, aside from contributing to the 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 use their code. During Pertsev’s previous trial, prosecutors argued that he did not establish sufficient safeguards to prevent money laundering. It was alleged that notorious hackers, including the North Korean state-backed Lazarus Group, used the protocol for their illicit activities.
The Lazarus Group is suspected of being behind a significant hack on Axie Infinity’s Ronin Bridge, where $625 million was stolen. It is believed that they laundered over $455 million of the stolen funds through Tornado Cash, which has facilitated over $7 billion in crypto laundering since its launch in 2019, according to the U.S. Department of the Treasury’s Office of Foreign Assets Control.
Pertsev’s sentence comes shortly after the arrest of the founders of Samourai Wallet, another cryptocurrency platform. The CEO and CTO of Samourai Wallet face charges of conspiracy to commit money laundering and operating an unlicensed money transmitting business. These events highlight the United States’ stance against privacy in the cryptocurrency space, according to DeFi Education Fund legal chief Amanda Tuminelli.
