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Dutch authorities detain a suspected developer of Tornado Cash

13-Aug-2022 By: Shikha Jha
Dutch authorities de

In its ongoing criminal investigation into the Tornado Cash

 cryptocurrency mixer, the Dutch Fiscal Information and Investigation Service did not completely rule out additional arrests.

A developer who is suspected of participating in money laundering through the cryptocurrency mixing service Tornado Cash has been detained by Dutch authorities. The arrest of a 29-year-old man in Amsterdam was officially announced on Friday by the Fiscal Information and Investigation Service (FIOD), a Dutch organisation charged with looking into financial offences.

The man is suspected of using Tornado Cash to facilitate illicit financial transfers and money laundering, according to the authority.

The FIOD noted that it hasn't ruled out making more than one arrest in the matter and mentioned that in June 2022, its Financial Advanced Cyber Team (FACT) opened a criminal investigation into Tornado Cash. The FACT asserts that large unlawful cash flows, including cryptocurrency-related scams and hacks, have been concealed using Tornado Cash.

These included funds that a North Korean-related gang is said to have stolen through hacking. The press announcement claims that since starting operations in 2019, Tornado Cash has made at least $7 billion in revenue.

The information was released immediately after the US Treasury Department on August 8 added dozens of Tornado Cash addresses to the OFAC's sanctions list. Following this, Circle, a significant cryptocurrency company and the company behind USD Coin (USDC), froze 75,000 USDC connected to addresses that were authorised by OFAC.

Any interaction with Tornado Cash's smart contract addresses by a U.S. individual or organisation is now forbidden as a result of the sanctions. Willful disobedience is punishable by fines of $50,000 to $10,000,000 and jail terms of 10 to 30 years.

The Treasury's action has caused the circumstances surrounding Tornado Cash to grow quickly. Some sources claim that a few more alleged mixing participants were also apparently detained in Estonia and the United States. Roman Panchenko, supposedly, was detained in Seattle, while Nikita Dementyev, allegedly, was detained in Tallinn.

The arrest of Tornado Cash creators and other individuals engaged in the project has angered many in the cryptocurrency industry. Industry watchers noted that it goes against the tenets of a free society to pay programmers to create privacy tools. Tornado Cash's Discord channel is said to have been deleted on Friday amid the reports. At the time of writing, it still has a functioning official Telegram group.

Tornado Cash, an Ethereum-based application, enables users to protect their anonymity during cryptographic transactions by hiding information trails on the blockchain. Co-founder of Ethereum Vitalik Buterin claimed that he used Tornado Cash to donate money to Ukraine in order to preserve the beneficiaries' financial anonymity.

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