The Tornado Cash website displayed on a laptop and smartphone screen arranged in London, U.K., on … [+]
The Dutch Fiscal Information and Investigation Service arrested the suspected developer of Ethereum-based cryptocurrency mixer Tornado Cash in Amsterdam on Wednesday.
The name of the 29-year-old man in custody was not released by the agency in a statement put out Friday morning.
“He is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralized Ethereum mixing service Tornado Cash,” the statement reads.
Tornado Cash, which allows for increased privacy of crypto transactions, and 45 wallets associated with the service were placed on the US Treasury Department’s OFAC list of sanctioned entities on Monday, essentially making it illegal for any “US persons” or companies to interact with the code.
The US and Dutch governments claim that Tornado Cash has facilitated money laundering for hackers that have stolen millions in some of the largest attacks in recent years, including by the North Korean Lazarus Group.
Others point out that the majority of transactions are for legitimate purposes, including donating to Ukraine following the Russian invasion.
Seth Hertlein with crypto hardware wallet maker Ledger argues that Tornado Cash is open source software code that constitutes a public good, similar to the Simple Mail Transfer Protocol (SMTP) that most emails are transmitted by.
“Of course, we should pursue criminal (persons) who misuse public goods,” he wrote on Twitter earlier this week. “But we don’t sanction SMTP because hackers send phishing emails or I-95 because drug dealers drive on it or cell towers that route terrorists’ calls. These are not persons – neither is Tornado Cash.”
Within hours, people began trolling celebrities by sending them tainted amounts of ethereum through the banned service.
The FIOD makes a point of explaining the decentralized nature of Tornado Cash, which is overseen by a decentralized autonomous organization (DAO) rather than a company or other conventional legal entity.
“It is suspected that persons behind this organization have made large-scale profits from these transactions,” the release continues. “Multiple arrests are not ruled out.”
The FIOD says that the suspect is set to be brought before a judge on Friday.
Developing story…
