Alexey Pertsev, the developer behind Tornado Cash, has been found guilty of money laundering and has lodged an appeal with the s-Hertogenbosch court of appeal. The appeal process is expected to take several months, and it is unclear if the appeal has been granted. Pertsev, who received a 64-month prison sentence, may request home confinement while awaiting the appeal trial. Following the guilty verdict, he was immediately taken into custody to serve his sentence as Tornado Cash was blacklisted by the U.S. government for its alleged involvement with the North Korean hacking group Lazarus.
The court found Pertsev guilty of money laundering activities related to Tornado Cash, stating that the app did not pose any barriers for criminals seeking to launder their assets. Pertsev was detained in the Netherlands in August 2022 when Tornado Cash was blacklisted by the U.S. Treasury for its alleged association with Lazarus, known for major crypto thefts including the $625 million Axie Infinity hack. Roman Storm and Roman Semenov, also involved in Tornado Cash’s development, are facing allegations of money laundering and sanctions violations in the United States. Storm is set to stand trial in September, while Semenov has not yet been apprehended.
In light of Pertsev’s guilty verdict, Democratic representatives in the U.S. have introduced the US Blockchain Integrity Act, aimed at banning cryptocurrency mixers to disrupt the flow of illicit funds and promote transparency. The proposed legislation would prohibit financial institutions, cryptocurrency exchanges, and registered money service businesses from accepting funds processed through a mixer, with civil penalties of up to $100,000 for non-compliance. This initiative comes amidst the U.S. government’s continued crackdown on crypto-mixing services, with the recent conviction of the founder of Bitcoin Fog, Roman Sterlingov, for money laundering-related charges.
As part of the crackdown on cryptocurrency mixers, the US Treasury has added Tornado Cash to its Specially Designated Nationals list, effectively barring Americans from using the service. The development of the US Blockchain Integrity Act and the conviction of the founder of Bitcoin Fog are reflective of the government’s efforts to combat money laundering through cryptocurrency platforms. Tornado Cash and its developers have come under scrutiny for alleged involvement in illicit activities, prompting legal action and sanctions as part of a broader effort to enhance regulatory oversight in the cryptocurrency sector. The outcome of Pertsev’s appeal and the ongoing legal proceedings against Storm and Semenov will likely shape future regulations and enforcement actions in the crypto space.
