Within the last week, crypto mixer Tornado Cash has been sanctioned by the U.S. Treasury and an alleged developer of the protocol has been arrested.
- A crypto mixer is a protocol that pools tokens from various addresses together and then distributes them back to users for the same amount they put in. But after being pooled, the tokens become extremely difficult to track – which is why they’ve been used by criminals for money laundering and illicit transactions.
- The U.S. treasury stated on August 8th that Tornado Cash has been sanctioned as the platform has been used to launder over US$7B worth of cryptocurrencies since its creation in 2019. This is because “Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks.”
- On the 12th a suspected developer of Tornado Cash, Alexey Pertsev, was arrested in the Netherlands by the FIOD for “involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralised Ethereum mixing service Tornado Cash,” his wife Ksenia Malik confirms. The FIOD confirms that Pertsev will remain in custody for 14 days.
- Multiple firms including GitHub, Circle, Infura and Alchemy have terminated or suspended accounts related to Tornado Cash including co-founder Roman Semenov who had his GitHub banned. “Is writing an open source code illegal now?” he stated.
- Users all over Twitter have condemned Pertsev’s arrest, with Ethereum co-founder Vitalik Buterin stating that he has used Tornado Cash before to donate to Ukraine so he couldn’t be identified by governments and to protect them recipients of the funds.
See Related: What Is A Crypto Mixer?
