Dutch Cops Arrest Developer Behind Sanctioned Tornado Cash Crypto Mixer

Dutch Cops Arrest Developer Behind Sanctioned Tornado Cash Crypto Mixer

A golden bitcoin sitting on the dials of a sound mixer

Not exactly the kind of “mixer” we’re talking about here, but the crypto bros often talk about seeing the price of their coins “go to 11”.
Photo: Satheesh Sankaran (Shutterstock)

The authorities claim that the founders of a “decentralized” and “open source” project run primarily by the community were making “large-scale profits” from illicit funds funneled through their platform, and now at least one founder has found himself face to face with the long arm of Dutch law enforcement.

The Netherlands Tax Information and Investigation Service, the national financial crime law enforcement division, announcement On Friday they had arrested a 29-year-old Amsterdam resident who they said was involved “in concealing criminal financial flows and facilitating money laundering” through the crypto mixer Tornado Cash.

Tornado Cash, which identifies itself as a decentralized open source project, was sanctioned by the US Treasury Department on Monday, accusing the service of enabling illicit parties to launder more than $7 billion worth of crypto in the three years since its launch. Among these was apparently a massive chunk of the $625 million Hacking the Ronin Bridge stolen by hackers linked to the North Korean regime.

But apparently Dutch officials investigated Tornado Cash even before the US put the crypto mixer on its sanctions list. The statement said FIOD’s cyber arm began investigating Tornado Cash in June of This year. The law enforcement agency said it suspects the people behind the creators of the Decentralized Autonomous Organization (DAO) that runs the crypto mixer of having made “at least” $7 in revenue. billions of dollars and that the founders “made large-scale profits” from funds. stolen through hacks, including those run by operations affiliated with North Korea.

On Friday morning, the site hosting Tornado.cash was down, and although we reached out to the developers online, we still haven’t heard what could have caused the problem. Treasury Department Sanctions Effectively Put Mixer’s Crypto Wallets On A list of sanctioned accounts, making it illegal for any US-based company or citizen to do business with the platform. Other crypto businesses like crypto consultants Circle quickly worked to distance himself from the sanctioned mixer.

DAOs are meant to be decentralized and require consensus voting from stakeholders to make changes to blockchain systems. However, the founders of DAO still have an outsized stake in the operation since they initially agreed to the rules and coding of the blockchain. Crypto mixers work by absorbing crypto funds from multiple users, mixing them to help disguise the source of the digital currency before redistributing the funds to users, minus a cut.

Fans of Tornado Cash and other crypto mixers are still advocating for their use despite the massive amount of illicit crypto laundering evident pass. Crypto proponents regularly evangelize the ideals of blockchain decentralization, claiming that part of the purpose of crypto is to keep transactions out of reach of government censors. Proponents cite examples such as the attempt to keep themselves and donors anonymous when offering financial support to Ukrainian troops fighting the ongoing Russian invasion. Vitalik Buterin, one of the founders of the Ethereum blockchain, said he used Tornado for this purpose.

There is no official confirmation of the arrest of the Tornado Cash developer, although the FIOD has further stated that it does not rule out the possibility of multiple arrests. It is unclear whether the arrest was related to the writing of the original mixer code or other allegations of illegal conduct.

One of the Tornado Cash developers, Roman Semenov, reported earlier this week that his GitHub account was down. disassembled. Despite complaining about “writing illegal open source code now”, the internet hosting service that is GitHub doesn’t technically handle Tornado Cash-sanctioned crypto wallets, so it’s more likely that the company is code hosting tries to avoid any connection to the highly quoted crypto mixer.

In a January interview with CoinDeskSenenov, co-founder of the mixing protocol, said that “the team doesn’t have much control over the protocol”, further stating that they mostly release code on GitHub, while all major decisions are made. by the Tornado community via the DAO.

Semenov did not immediately respond to questions Gizmodo sent to Twitter. A GitHub spokesperson told Gizmodo in an email that “trade laws require GitHub to restrict users and customers identified as Specially Designated Nationals (SDNs) or other denied or blocked parties, or who may use GitHub on behalf of blocked parties”.

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