Crypto money laundering with Tornado Cash: 5 years in prison for programmer
Criminal profits in the billions were and are laundered with Tornado Cash. One of the developers has now been convicted in the Netherlands.
(Image: Olga Donchuk/Shutterstock.com)
The East Brabant District Court has sentenced Aleksej P. (also known as Alexej or Alexey P.), one of the three programmers of the Tornado Cash crypto money laundering system, to five years and four months in prison. He is guilty of laundering large amounts of the cryptocurrency Ethereum, but can take legal action. Investigators found the Russian, who lives in the Netherlands, through his work on Tornado Cash documented on Github, which P. does not deny.
Tornado Cash is a decentralized mixing service that works with smart contracts. Mixing services collect transactions from those willing to mix in a large pool and send the users' money from there to fresh crypto wallet addresses. If enough people are involved and the payouts are cleverly divided up, it is difficult for outsiders to trace the flow of money.
P. argued in the criminal proceedings that with Tornado Cash he had merely developed a tool for whose illegal use by third parties he could not be held responsible. This argument was not heard in court. The fact that the smart contracts essential to Tornado Cash cannot be changed and are self-executing is ultimately no coincidence: "These properties are the result of deliberate decisions by the designers. Tornado Cash works as intended. In the opinion of the court, the suspect can therefore be regarded as the perpetrator of the money laundering activities carried out by Tornado Cash," explains the grounds for the judgment (case no. 82/198261-22).
Masquerade with DAO
"The fact that Tornado Cash at some point began to function as a so-called decentralized autonomous organization (DAO) does not change this," the court states - because any changes decided by the DAO only affected future versions of Tornado Cash. Those responsible at the time, i.e. Aleksej P. and his two co-suspects, are liable for previously published versions.
In addition, they had secured so many voting rights when the DAO was founded that the court classified them as exercising control there as well. They had even voted on some decisions without prior notice, which meant that other voters had no influence at all. In addition, there was the financial interest of the convicted person: Through the specially established cryptocurrency TORN, he had helped to earn money from the money laundering carried out by third parties.
In general, chats proved that the trio knew what their service was being used for. They had deliberately not taken any precautions. Scripts added later to block certain wallets were ineffective because money launderers could use other wallets or simply switch off the script without having to do without the Tornado Cash crypto washing machine.
US trial against co-suspects
In addition to the prison sentence, the court ordered the forfeiture of confiscated cryptocurrencies and a Porsche with a total value of around two million euros. However, P. will get back cryptocurrencies and a MacBook with a total value of around 160,000 euros. No details are given in the reasons for the verdict. P. had been in custody since August 2022. This will count towards his prison sentence. The sentence is based on proven laundering of over one billion dollars from criminal proceeds. US authorities claim to be able to prove laundering of more than seven billion dollars.
The two co-suspects Roman Storm and Roman Semenov have been charged in the USA with crypto money laundering with Tornado Cash. The former is in custody there, while the latter is likely to evade justice in Dubai. In an online post, Semenov insults the Dutch justice system as "blind and deaf to the true genius and innovation of Aleksej and Tornado Cash". Addition: "As crypto builders, we are all Aleksej."
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