Alleged Tornado Cash Dev Suspected of ‘Facilitating Money Laundering’: FIOD

The Dutch financial crimes agency that last week arrested a 29-year-old developer in connection with cryptocurrency mixer Tornado Cash said that “he is suspected of involvement in concealing criminal financial flows and facilitating money laundering.”

The DeFi Education Fund, a policy nonprofit that advocates for decentralized finance, published the responses it said it received from the Fiscal Information and Investigation Service (FIOD) on Twitter on Tuesday morning. 

FIOD just followed up with more information on the Tornado Cash developer who was arrested last week.

We’ll keep sending updates as they come in. https://t.co/FPu2wMvTSK pic.twitter.com/vpn2aBYRyZ

— Sam (@sccanavos) August 16, 2022

Tornado Cash is an app that obscures Ethereum transactions, which has made it popular with traders who want to maintain their privacy. 

«We first reached out to FIOD on Friday and have made all the information we have received from them public,» Max Bernstein, the DeFi Education Fund’s communications lead, told Decrypt in an email. «They also did not decline to answer any questions directly.»

But the U.S. government has said that the project “repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors,” and the Office of Financial Assets Control (OFAC) added dozens of crypto wallet addresses to its sanctions list on August 8.

FIOD confirmed in a press release last week that it made an arrest in connection to Tornado Cash, but declined to confirm whether the person in custody is Alexey Pertsev.

Coin Center Says It May Challenge Tornado Cash Ban in Court

“I cannot confirm the name mentioned, so if you refer to the person that was arrested last Wednesday, then I can tell you that he is suspected of involvement in concealing criminal financial flows and facilitating money laundering,” an agency spokesperson wrote in a reply to The DeFi Education Fund.

The FIOD spokesperson went on to say that the agency has been working under the direction of the Dutch Prosecutor’s Office, but has not been coordinating with the U.S. government and did not make the arrest due to OFAC’s blacklisting of Tornado Cash.

Tornado Cash sanctions shakes crypto industry

The app’s native token, TORN, took its first big tumble the day OFAC announced that it had been added to the sanctions list, dropping from $30.55 to $22.02. On Tuesday morning, TORN was trading at $12.74, down 58% from the day the sanctions were announced.

Since last week, a growing number of crypto advocacy groups have pushed back on the U.S. Treasury Department’s decision to sanction Tornado Cash. 

The Electronic Frontier Foundation said, “there are clear First Amendment implications whenever the government inhibits the publication of computer code on a public website.”

Meanwhile, Coin Center has said that OFAC overstepped its bounds and “potentially violates constitutional rights to due process and free speech.”

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