Crypto Execs Blast For Tornado Cash Developer Alexey Pertsev’s Arrest
The software developer arrested this week over suspected of involvement in the Tornado Cash crypto mixing service is Alexey Pertsev, his wife has told The Block today, confirming earlier speculation on Twitter.
Ksenia Malik, who married Pertsev last September, said the Dutch Fiscal Information and Investigation Service (FIOD) arrested Pertsev on August 10 in Amsterdam city center.
She went on to say that she’s in shock over her husband’s arrest and is currently working with lawyers. “My husband didn’t do anything illegal,” she said.
The FIOD, in its announcement today, said it arrested a 29-year-old man suspected of involvement in concealing criminal financial flows and facilitating money laundering through Tornado Cash, which allows users to obscure blockchain-based transactions.
A spokesperson for FIOD declined to comment on the arrested person’s identity when contacted by The Block.
The agency in its announcement said “multiple arrests are not ruled out.”
It suspects that through Tornado Cash, large-scale criminal money flows have been concealed. “These included funds stolen through hacks by a group believed to be associated with North Korea,” the FIOD stated. “Investigations showed that at least one billion dollars’ worth of cryptocurrencies of criminal origin passed through the mixer. It is suspected that persons behind this organisation have made large-scale profits from these transactions.”
FIOD’s action comes two days after the US government sanctioned Tornado Cash. The US Treasury added Tornado Cash and 44 associated Ethereum and USDC wallets to its Specially Designated Nationals list on August 8. The wallets identified included the smart contract that runs Tornado Cash and the Tornado Cash donation wallet.
Dangerous Precedent
Crypto industry executives reacted with alarm at the arrest of a developer suspected of involvement in Tornado Cash.
The Dutch Fiscal Information and Investigation Service (FIOD) arrested an unidentified 29-year-old man in Amsterdam, it said on Friday, alleging that he was involved in concealing criminal financial flows and facilitating money laundering through Tornado Cash, a crypto mixing service that allows users to obscure blockchain-based transactions.
Ryan Sean Adams, founder of Mythos Capital and Bankless, was among the first to condemn the arrest. He tweeted about two hours after it was made public that the suspect may have written “code that served as a public good for people to maintain their privacy online.”
“They put a man in jail because bad people used his open source code,” Adams wrote. “This cannot stand in any free society.”
They arrested the developer of tornado cash. ?
I repeat: a man was arrested for writing code that served as a public good for people to maintain their privacy online.
They put a man in jail because bad people used his open source code.
The arrest was also seen as an assault on privacy by Cinneamhain Ventures partner Adam Cochran. “Code is free speech. Unless there is more to this story, then arresting someone for making a privacy tool that was misused is an insane government overreach,” Cochran tweeted.
What the hell?
We’ll need to hear more of the specifics but this is insane.
Code is free speech.
Unless there is more to this story then arresting someone for making a privacy tool that was misused is an insane government overreach.
— Adam Cochran (adamscochran.eth) (@adamscochran) August 12, 2022
Robin Andre Nordnes, an analyst at Outlier Ventures, tweeted via his handle @degenroot that the arrest was a “dangerous” precedent and a pivotal moment in the crypto industry that might have “huge consequences.”
With a suspected #TornadoCash developer now arrested in the Netherlands, dangerous precedence is now taking root.
I CANNOT state this enough, this is a pivotal moment in our industry – this can have HUGE consequences for the Web3 decentralised industry in general.
Aave founder Stani Kulechov echoed Nordnes, tweeting that an arrest for writing privacy-preserving code was out of line: “This arrest makes all privacy/encryption developers a target,” he said, adding that “people use privacy tools on a daily basis online.”
Getting arrested for writing privacy preserving code is out of line. This arrest makes all privacy/encryption developers a target. The worst part is people use privacy tools on a daily basis online, because the internet is an unsafe place without privacy or encryption.
Yearn core developer Banteg likened the arrest to detaining the founders of a firearms manufacturing company for facilitating a public shooting, or a pressure-cooker company founder for terrorism.
BREAKING
A founder of a gun making company is arrested for facilitating a public shooting.
A founder of a knife making company is arrested for facilitating a stabbing.
A founder of a pressure cooker making company is arrested for facilitating terrorism.
The arrest took place on Wednesday, just two days after the US Treasury added Tornado Cash and 44 associated Ethereum and USDC wallets to its Specially Designated Nationals list. The Treasury accused the crypto mixer of laundering more than $455 million for North Korea’s Lazarus Group amid Tornado Cash’s association with high-profile hacks including Ronin and Harmony. The sanction was believed to be the first by a US regulator against a DeFi operator.
Ryan Selkis, co-founder and CEO of crypto research firm Messari, slammed the Treasury decision. He wrote on Twitter that the US government’s crypto policies “reward scammers and bad actors,” while punishing innovators.
