- A panel of judges in the Netherlands will decide whether Pertsev is guilty of money laundering on Tuesday.
- A guilty verdict may result in a chilling effect on open source developers.
- More cases involving Tornado Cash loom in the US.
Of the many legal challenges confronting the crypto industry, the Tornado Cash cases may be the gravest of them all.
Many crypto experts say nothing less than the future of tech development and privacy is at stake.
On Tuesday, the first test will come in a courtroom in the Dutch city of ‘s–Hertogenbosch. This is where Alexey Pertsev, 31, a developer at the crypto mixer, will hear whether he’s been found guilty of laundering $1.2 billion in illicit funds.
‘Chilling effect’
If he is found guilty, experts expect a “chilling effect” on the global open source community. Developers may fear writing code if it is misused, and investment may dwindle.
If Pertsev is acquitted, then the judges will have accepted his explanation that the technology at the heart of Tornado Cash — smart contracts — lawfully operates independent of human intervention.
Even more poignantly, the managers of such platforms cannot be held responsible for who uses the technology.
Here is timeline of the events leading up this important moment:
2019
- August 6: Tornado Cash goes live to enable users to “send Ethereum cryptocurrency with 100% anonymity.”
- September 13: The US Office of Foreign Assets Control (OFAC) sanctions North Korean cyber groups including Lazarus Group. Authorities note the abuse of crypto tools and hack of crypto exchanges.
2020
- May 13: Tornado Cash completes its so-called trusted set-up ceremony, a process to decentralise and increase security to the protocol.
- June 4: Tornado Cash developers deploy an optional compliance tool for users to select to reveal their transaction histories if needed.
- September 25: Hackers drain $275 million worth of crypto from KuCoin exchange. This is one of the largest hack Dutch prosecutors connect to Tornado Cash.
2022
- March 23: Axie Infinity Ronin Bridge loses around $625 million to a hack. This is one of the biggest crypto hacks to date, and the biggest prosecutors say criminals laundered the money through Tornado Cash.
- May 6: OFAC sanctions its first virtual currency mixer, Blender, used by North Korean cyber crime groups.
- June 24: Lazarus Group hacks Harmony Horizon bridge, where almost $100 million worth of stolen crypto passed through Tornado Cash. This is another big hack using Tornado Cash to launder gains, according to Dutch prosecutors.
- August 8: OFAC sanctions Tornado Cash, for its use in laundering $7 billion of dirty money.
- August 10: Alexey Pertsev is arrested in the Netherlands and jailed without public charges.
- October 12: Coin Center sues OFAC over its Tornado Cash sanction.
- November 22: Dutch prosecutors disclose charges for the first time in a court hearing.
2023
- April 20: Pertsev is released from jail pending trial.
- August 23: The US Department of Justice charges Tornado Cash developer Roman Storm, and sanctions developer Roman Semenov.
2024
- March 25-26: Pertsev is tried over two days in the Dutch city of ‘s-Hertogenbosch.
- April 5: US Trade associations file briefs with the court in defence of Roman Storm and address each of the charges against him.
- May 14: Judges in the Netherlands to issue a verdict in Pertsev’s case.
- September 23: Roman Storm trial scheduled to begin in the US.
Inbar Preiss is DL News’ Brussels correspondent. Contact the author at inbar@dlnews.com.
