Duch Police Arrested Tornado Cash Developer, More arrests to Come
The Netherlands Crime Agency (FIOD) announced today that it had apprehended a “suspected developer” of Tornado Cash. Tornado Cash is the Ethereum-centric mixing service that was sanctioned by the United States Treasury earlier this week.
An individual who was 29 years old was taken into custody by the FIOD in Amsterdam on August 10th.
“He is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralized Ethereum mixing service Tornado Cash,” the agency said in a statement.
“He is also suspected of facilitating money laundering by mixing cryptocurrencies through the Tornado Cash platform.”
According to FIOD, “today the suspect is brought before the examining court,” and the organization also mentioned that “additional arrests are not excluded out.”
FIOD also stated that a criminal inquiry against Tornado Cash had been opened by the Financial Advanced Cyber Team (FACT) in June of 2022. FACT is a part of the agency that FIOD is a part of.
“FACT has reason to assume that large-scale illegal money flows have been concealed through the use of Tornado Cash, including those that originated from (online) thefts of cryptocurrencies.”
According to the statement, these included monies obtained illegally through hacking carried out by an organization that was believed to have ties to North Korea.
The chronicle of Tornado Cash
Tornado Cash is a privacy tool that was introduced in 2019, and its purpose is to obscure the origin of Ethereum transactions. It does this by combining a large number of transactions into a single batch, then mixing the batches so that they cannot be traced on the public blockchain.
Authorities have been keeping a close eye on Tornado Cash for a long time because of its high privacy level. Many of them are afraid that the tool is being used for illegal operations such as money laundering and other unlawful pursuits.
When the United States Treasury Department added Tornado Cash and a large number of addresses that are associated with the service to its list of Specially Designated Nationals on Monday, it effectively prohibited Americans from using the tool and conducting business with the addresses that were mentioned.
The Treasury Department supported the move by identifying numerous instances in which Tornado Cash had been utilized for laundering money by organizations such as the hacking group Lazarus Group, which was sponsored by the North Korean state.
Since that time, the Tornado Cash website has been unreachable. The project tweeted recently that it offered a list of companies and projects that had complied with the restriction.
Here's the list of Tornado Cash resources that were banned
– Tornado Cash @GitHub organization
– personal @GitHub accounts of TC contributors
– all $USDC on Tornado Cash contracts @circlepay
– @infura_io RPC
– @AlchemyPlatform RPC
– https://t.co/SHvgEjTOMV domain @eth_limo
— 🌪️ Tornado.cash 🌪️ (@TornadoCash) August 9, 2022
Circle, a corporation that provides financial services; GitHub pulled the source code for Tornado Cash from its platform; Alchemy, Infura; and the decentralized exchange dYdX, which started blocking addresses related to the service; are some of the companies that fall into this category.
Industry Veterans Condemn the Move
In the days that followed the announcement, many important figures in the cryptocurrency business denounced the decision made by the Treasury, condemning the ban as not only illegal but also an existential threat to the privacy of users.
Vitalik Buterin, the co-founder of Ethereum, was one of them. He said that he had personally used the site that had been blacklisted to make donations to Ukraine, which has been facing a Russian invasion since the end of February.
My intent was protecting the recipients, not myself. The RU government knows my positions on the Ukraine issue anyway:https://t.co/nkgrqVY2au
— vitalik.eth (@VitalikButerin) August 9, 2022
Buterin claims that he only used Tornado Cash to safeguard the people who received it, not himself.