- Tornado Cash developer Alexey Pertsev will stay in jail in the Netherlands until at least February.
- Pertsev is facing accusations that the protocol he developed has facilitated money laundering.
- Tornado Cash is a decentralized crypto mixer. Pertsev has no control over it.
Tornado Cash developer Alexey Pertsev has been ordered to stay in jail until at least the next session of the ongoing hearing in February. This comes after a Dutch court determined that he’s a flight risk.
Pertsev, a Russian national living in the Netherlands, has been detained since August following the U.S. Treasury’s ban on the Tornado Cash protocol. The American authorities said it is a tool for money laundering and supports North Korean hackers.
Pertsev is accused of facilitating money laundering by writing the Tornado Cash code. The protocol is an open-source, decentralized crypto mixer built on the Ethereum blockchain. It mixes identifiable funds with others so as to conceal the original source of coins. Because the protocol is decentralized and permissionless, Pertsev has no power over it.
Pertsev’s situation is in stark contrast to other potential bad actors that have wreaked havoc in the crypto markets this year. Edward Snowden, the famous U.S. whistleblower, compared Pertsev’s arrest to former CEO of bankrupt crypto exchange FTX Sam Bankman-Fried. Snowden said Bankman-Fried’s political connections are what allows him to stay free despite potentially committing multiple crimes.
“The White House sanctions and arrests kids for the “crime” of building privacy tools to protect you, while “regulators” were quietly palling around with the thieves who just robbed 5 million people. The difference? The thieves were big political donors,” he said in a tweet two weeks ago.
Bankman-Fried’s FTX is accused of mishandling up to $10 billion in customer funds, among other potentially criminal business practices. He is currently in the Bahamas under the supervision of local regulators.
It’s worth noting that the people responsible for the biggest crashes, or at least shady business practices, in this year’s crypto bear market have yet to be detained. These include defunct crypto hedge fund Three Arrows Capital’s founders Su Zhu and Kyle Davies, Terra Luna’s Do Kwon, and bankrupt lender Celsius’ former CEO Alex Mashinsky.
On the Flipside
- It’s unclear when Pertsev will be released from jail.
Why You Should Care
Alexey Pertsev’s situation is closely followed by the crypto community. If he’s found guilty, this would potentially create a precedent for other crypto founders to be arrested on similar grounds.