Why Conviction of Tornado Cash Dev Has Sparked Outrage

A Dutch court sentences Tornado Cash developer Alexey Pertsev to 64 months in prison.

Judges hammer going down on a tornado.
Created by Kornelija Poderskytฤ— from DailyCoin
  • A Dutch court has found Tornado Cash developer Alexey Pertsev guilty of money laundering.
  • Outrage has trailed the court decision.
  • The outrage comes as many worry about the precedent the ruling sets for crypto and technological development in general.

After nearly two years, the trial of Tornado Cash developer Alexey Pertsev has come to a head.

The developer was charged with money laundering in the Netherlands in November 2022, as authorities sought to hold him responsible for criminal elements, including North Korean hackers, using the privacy protocol to launder stolen cryptocurrency worth billions of dollars. 

Sponsored

On Tuesday, May 14, a ruling was finally issued in the case, setting what many have described as a horrible precedent for the industry.

Pertsev Conviction Sparks Outrage 

On Tuesday, May 14, a Dutch court found Pertsev guilty of laundering $1.2 billion on Tornado Cash and sentenced the developer to 64 months or five years and four months in prison.

According to a translated summary of the ruling, the court found that the developer’s failure to implement controls to prevent abuse of the protocol, even after discovering that criminal elements were using it, made him responsible for the abuse. The ruling, however, has sparked outrage within the crypto community.

Former KPMG France Blockchain and Crypto Director Alexandre Stachtchenko asserted:

"This has gone too far. It is time to end this KYC and surveillance mess before it eats democracy itself."

Independent crypto journalist Lola L33tz described the ruling as “insane,” adding that it practically outlawed building any privacy service.

ConsenSys lawyer Bill Hughes described the ruling as “among the most chilling lines” crypto industry participants will ever read.

These views go beyond privacy concerns; many worry about the precedent it sets for crypto and technological development in general.

An Affront on The Freedom of Expression?

For many, the Tornado Cash case raises whether developers should be held responsible for how their code is used.

“We don’t hold Microsoft responsible when drug gangs use Excel to keep track of their profits. 

We don’t arrest Apple executives when criminals plot crimes using FaceTime. We don’t prosecute the NYSE because people can use it for insider trading,” Morrison Cohen Partner Jason Gottlieb stressed while explaining that code should not be illegal, even though its abuse may be.

Gottlieb argued that code, like speech, was a form of expression protected by the First Amendment.

"We should not abuse fundamental rights to pursue even terrible criminals," he wrote.

Beyond the Pertsev case in the Netherlands, two other Tornado Cash developers, Roman Storm and Roman Semenov, face similar money laundering charges in the U.S. The trial is set to begin on September 23.

While some experts have argued that the Netherlands case is not indicative of what could happen in the U.S., in 2023, a U.S. court rejected a Coinbase-backed effort to overturn the U.S. Treasury’s Office of Foreign Asset Control (OFAC) sanction on Tornado Cash. The judge found that the protocol and its DAO operated as a corporation as opposed to claims that it was just a piece of code.

On the Flipside 

  • Pertsev has 14 days to appeal his conviction.
  • Semenov remains at large.
  • Ethereum founder Vitalik Buterin has recently endorsed Railgun, a Tornado Cash alternative that implements “privacy pools” to make it difficult for bad actors to use the tool.

Why This Matters 

The conviction of Tornado Cash’s Alexey Pertsev sets a powerful precedent for crypto and technology development, raising questions about the extent to which developers can be blamed for how their software is used.

Read this for more Tornado Cash debacle:
DOJ Rejects Tornado Cash Founder’s ‘Just a Developer’ Claim

See why a statement from the U.S. SEC is drawing fire from Coinbase’s Paul Grewal:
Why SEC’s “Remarkable Admission” Has Coinbase CLO Up in Arms

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Okoya David

David Okoya is a journalist at DailyCoin covering DeFi ecosystems and exchanges. David has moderate holdings in Bitcoin, and minor holdings in LINK, DOT, INJ, and memecoins.

Read more