- Pertsev received a 5-year sentence for laundering US$2.2bn through Tornado Cash, which was used by cybercriminals.
- Prosecutors argued Tornado Cash operated like a company and that Pertsev ignored legal obligations.
- Pertsev’s defence claimed Tornado Cash was decentralised and open-source, but the court disagreed, emphasising legal non-compliance.
Alexey Pertsev, the developer of Tornado Cash, has been sentenced to five years and four months by a Dutch court. The panel consisting of three judges ruled that Pertsev was guilty of money laundering US$2.2bn (AU$3.3bn) through the decentralised protocol.
Prosecutors in the case argued that Pertsev didn’t do enough to stop cyber criminals from accessing Tornado Cash. They claimed that between 9 July 2019 and 10 August 2022, Pertsev habitually engaged in money laundering and should have suspected the criminal origins of illicit transactions on the Tornado Cash platform.
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The US Treasury alleged the platform was used by infamous North Korean hacker group Lazarus who have been brought in connection with major hacks and online theft.
Judge Henrieke Slaar said:
Tornado Cash in its nature and functioning is a tool intended for criminals. The criminal user is fully facilitated.
Judge Henrieke Slaar
Pertsev and his legal team contended that the prosecutors failed to consider the automated and open-source characteristics of Tornado Cash’s smart contracts. Pertsev claimed it was unfair to hold him accountable for the actions of anonymous, independent users of Tornado Cash.
Judge Slaar wasn’t impressed and replied:
Under the pretense of ideology, you did not care about the laws and regulations that apply to everyone and felt untouchable.
Judge Henrieke Slaar
Prosecution Argues TornadoCash Run Like a Company
Tornado Cash is an Ethereum application that lets users mix transactions by depositing assets into a smart contract and withdrawing them to a new address, making it nearly impossible to link deposits to withdrawals.
Pertsev and his co-developers claimed they provided a privacy solution for the transparent Ethereum blockchain. Defence lawyer Keith Cheng stated that neither Pertsev nor others could prevent users from utilising the open-source code, and the contributors operated as a decentralised organisation without a single leader.
However, prosecutors contended that the technology’s benefits did not excuse legal obligations to prevent aiding criminals. Public prosecutor Martine Boerlage asserted that Tornado Cash operated like a company, with more than just smart contracts and leadership involvement.
The crypto community was naturally not happy with the verdict, and critics argued it was unfair and political.
Crypto investor and commentator Ryan Sean Adams said it was a “sad day for the Netherlands” and criticised the court for making “privacy illegal”.
Business developer Joel Valenzuela further said that this showed that the “crypto crackdown” is a worldwide issue, adding that “privacy is clearly under attack”.
Pertsev, a 31-year-old Russian national living in the Netherlands, will remain in a cell in the courthouse until it has been decided to which prison he will be transferred. His eight months already served will be deducted from the sentence, and he now has 14 days to appeal.
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