Alexey Pertsev, the developer of Tornado Cash, an open-source crypto-mixing protocol, has been detained until his next hearing on April 21, as ruled by a Dutch court.
The court of East Brabant in Holland has also scheduled a pre-trial review for May 24. In August, Pertsev was arrested by Dutch authorities just days after the US Treasury sanctioned Tornado Cash, alleging that the crypto-mixing service facilitated the laundering of funds for malicious cyber actors, including a hacking group the FBI accuses of having connections to North Korea.
Tornado Cash is a service that allows users to pool their crypto funds with others. It is an open-source protocol that advocates privacy in mixing and pooling users’ funds within multiple wallets, obfuscating in/out-flows of funds, and offering anonymization services for cryptocurrencies.
However, Tornado Cash is being accused of laundering $7 billion worth of funds, including $455 million stolen by the North Korea-linked Lazarus group, as alleged by the FBI.
The Dutch Ministry of Finance (FIOD) has accused Pertsev of “concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralized Ethereum mixing service Tornado Cash.” However, Pertsev has not yet been formally charged with a crime.
He is being detained for 110-day intervals under a provision in Dutch law that allows people to be held for such periods without being formally charged.
Pertsev has had three appeals rejected since his arrest, with the last one being denied in November 2022. Several prominent blockchain developers have stood up for Pertsev online, with a number of them sharing links to the FreeAlex.nl page and a change.org petition, which so far has over 5,000 signatures in support of Pertsev.
The case of Alexey Pertsev highlights the need for greater clarity in the regulation of cryptocurrencies and their associated services.
As the use of cryptocurrencies continues to grow, it is essential that governments and regulators work together to ensure that these digital assets are not used to facilitate criminal activities.
While Tornado Cash and similar services have the potential to offer users greater privacy and security, they must also operate within the bounds of the law.
The outcome of Pertsev’s case may have significant implications for the future of the crypto industry, particularly regarding the development and use of crypto-mixing services.