Crypto Community Voices Outrage at Tornado Cash Developer Verdict

• A developer of the anonymizing tool Tornado Cash, Alexey Pertsev, was sentenced to spend 64 months in prison.

• Many members of the crypto community say the decision is outlandish.

‘S-HERTOGENBOSCH, Netherlands — As 31-year old Russian Alexey Pertsev stood outside the courtroom on Tuesday awaiting a verdict from a judge at the s-Hertogenbosch courthouse in the Netherlands, he looked calm. When the judge ruled the Tornado Cash developer was guilty of money laundering, he did not appear to be outraged.

It wasn’t until the Dutch police edged toward him that he seemed surprised he wouldn’t get to say goodbye to his loved ones – to anyone – and was instead immediately escorted to a cell under the large courthouse while the police found an appropriate jail for him to live out his 64-month sentence. Spectators in the courtroom were dumbfounded.

Shock also rippled across the crypto community. Once the verdict was reached many took to X (formerly Twitter) to express their woes.

“Wow, 64 months for developing software, that’s crazy,” one user wrote.

“Sad day for privacy, crypto and open-source,” Pablo Sabbatella, head of security research at crypto protection company Blockfence said, a view other users echoed.

“This has gone too far,” said Alexandre Stachtchenko, the former director of crypto and blockchain at KPMG France.

“Another awful decision that will ultimately harm all of us,” another user wrote.

“This is the battlefield for privacy, speech, individualism, and yes, crypto,” Ryan Selkis, founder and CEO of market intelligence products provider Messari Crypto said on X.

A necessary step

The response, however, was not unanimous. Zumo founder and CEO Nick Jones saw the decision as a necessary step in crypto’s development.

“This is essential for fostering exemplary practices among all industry participants, ensuring a sector that people can trust,” Jones said.

Regulators and legal bodies worldwide have been tightening money laundering requirements for crypto. The European Union recently adopted a set of anti-money laundering rules that affect the industry, while the U.K enforced a crime bill to help seize and freeze crypto used for money laundering and other crimes in April. Money laundering is the process of disguising financial assets to make them look legitimate.

The Dutch judge argued that Pertsev, who co-developed the anonymizing tool Tornado Cash, helped execute money laundering transactions.

“It was Tornado Cash that executed the concealing and disguising [of] activities,” an English translation of the verdict said. “When executing these activities with cryptocurrency derived from crime, Tornado Cash carries out money laundering activities.”

To Louise Abbott, a partner at Keystone Law, the decision makes sense given nations’ anti-money laundering objectives.

Tornado Cash is “a very popular offering for those with something to hide because it causes massive problems from a compliance and regulatory perspective. Tracing these transactions is almost impossible,” Abbott said in an interview over email.

The platform has been a key tool for North Korean hacking group Lazarus, which has been tied to a $625 million hack of Axie Infinity’s Ronin Network and other major crypto thefts.

“In my opinion, the Dutch Courts have rightly found Alexey Pertsev, its developer, guilty of money laundering offenses,” she said.

Not every lawyer shares her views.

“It’s a harsh punishment,” said David Schreuders, a partner at law firm Simmons and Simmons’ Amsterdam office.

Crypto lawyer Fatemeh Fannizadeh told CoinDesk’s Daniel Kuhn that the decentralized nature of crypto technology called for a “more nuanced legal approach,” than the traditional one.

What’s next?

Pertsev’s trial is not the only one related to Tornado Cash. Roman Storm and Roman Semenov, who also helped develop the platform, face allegations of money laundering and sanctions violations in the U.S. Storm is expected to go to trial in September. Semenov has yet to be arrested. Pertsev’s verdict could have an impact on those trials.

“The guilty verdict in the Dutch Courts will have persuasive power in the U.S. Presumably the Dutch Court held there was sufficient evidence to link Pertsev’s conduct to akin to money laundering,” Abbott said. “If those same links can be made with Storm, then that will undoubtedly help prosecutors in the U.S.”

It may not be over yet. Pertsev has applied to appeal the judges verdict. If his appeal is successful and a different verdict is reached, that new verdict could overrule the previous decision.

“Any appeal would require Mr. Pertsev to prove that he as an individual was not responsible for the systems that allowed the anonymity of the Tornado cash programme,” Abbott said.