Tornado Cash Developer Appeals Money Laundering Conviction, Seeks to Overturn Verdict
Ruholamin Haqshanas
Last updated:
May 16, 2024 06:39 EDT
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2 min read
Alexey Pertsev, the mastermind behind the popular cryptocurrency tool Tornado Cash, has lodged an appeal with the s-Hertogenbosch court of appeal after being found guilty of money laundering. The appeal process is expected to take several months, although it is uncertain whether the appeal has been granted.
Pertsev, who was sentenced to 64 months in prison, has the option to request home confinement while awaiting the appeal trial. However, following Tuesday’s verdict, he was immediately taken into custody to begin serving his sentence.
One of the key points made in the verdict was that “Tornado Cash does not present any obstacles for individuals with illicit assets seeking to launder them,” as roughly translated. Based on this assessment, the court found Pertsev guilty of the money laundering charges.
Pertsev was arrested in the Netherlands in August 2022 when Tornado Cash was blacklisted by the U.S. government. The U.S. Treasury accused Tornado Cash of being a vital tool for the North Korean hacking group Lazarus, which has been implicated in major cryptocurrency thefts, including the $625 million hack of Axie Infinity’s Ronin Network.
Two other individuals, Roman Storm and Roman Semenov, who were also involved in the development of Tornado Cash, are facing allegations of money laundering and sanctions violations in the United States. Storm is scheduled to face trial in September, while Semenov has yet to be apprehended. Storm was arrested last year after Tornado Cash was once again added to the U.S. sanctions watchlist.
In late March, Storm filed a motion to dismiss all three charges against him, asserting that he did not operate a money laundering business and did not violate the International Emergency Economic Powers Act. However, the motion was rejected by the U.S. Department of Justice (DOJ), which argued that Tornado Cash, announced in 2019 as a mixer, consisted of a website, user interface, a combination of smart contracts, and a network of “relayers.”
In a separate development, Democratic representatives have introduced the US Blockchain Integrity Act, which aims to crack down on cryptocurrency mixers. The proposed legislation seeks to disrupt the flow of illicit funds and promote transparency by prohibiting financial institutions, cryptocurrency exchanges, and registered money service businesses from accepting funds processed through a mixer. Failure to comply could result in civil penalties of up to $100,000.
These developments come in the midst of the U.S. government’s ongoing efforts to clamp down on crypto-mixing services. Recently, the founder of Bitcoin Fog, a $400 million crypto-mixing service, was convicted of money laundering. Roman Sterlingov was found guilty of money laundering, money laundering conspiracy, operating an unlicensed money-transmitting business, and violations of the D.C. Money Transmitters Act.
As a result, the U.S. Treasury has added Tornado Cash to its Specially Designated Nationals list, effectively prohibiting Americans from using this mixer.
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