A man, age 29, has been detained in Amsterdam on suspicion of developing the cryptocurrency “mixer” Tornado Cash, which was outlawed earlier this month by the US Department of the Treasury for its role in laundering money from large-scale hacking activities, particularly those tied to state-sponsored North Korean cybergangs.
The arrest was reported by the Fiscal Information and Investigation Service (FIOD) of the Netherlands. FIOD has said that the person is “suspected of participation in hiding unlawful financial flows and enabling money laundering,” and that “additional arrests are not ruled out” while investigations into Tornado Cash continue. The suspect will be presented to a fact-finding judge today.
Authorities have expressed concern that cryptocurrency mixers are not doing enough to prevent money laundering.
The arrest in Amsterdam is part of a worldwide trend of law enforcement cracking down on Tornado Cash and similar cryptocurrency mixers. By collecting monies from a large number of users and then dispersing them, these services make it more difficult for authorities to follow the digital breadcrumbs left by bitcoin transactions.
Institutions like the US Department of the Treasury (DOT) argue that these businesses have ignored their role as a conduit for unlawful money laundering. Blender.io, another crypto mixer, was added to the DOT’s sanctions list earlier this year after it was also discovered to be utilised by North Korean hacker organisations.
Supporters of cryptocurrencies have responded that crypto mixers fulfil a crucial ideal by providing an extra level of anonymity while doing transactions.
For instance, in reaction to US penalties against Tornado Cash, crypto advocacy organisation Coin Center said that the US government was wrongly going after “a tool that is neutral in nature and that can be employed to good or harmful applications like any other technology.”
Coin Center’s Jerry Brito and Peter Van Valkenburgh noted in a weblog that “it is not any single bad actor who is being sanctioned, but rather it is all Americans who may desire to utilise this automated tool in order to preserve their own privacy.”
One Twitter user mentioned hiding contributions to Ukraine from authorities as an example of a financial transaction that may put both parties in danger if it were made public. Vitalik Buterin, co-founder of Ethereum, responded by saying he had used Tornado Cash “to give to this very purpose.”
I’ll out myself as someone who has used TC to donate to this exact cause.
— vitalik.eth (@VitalikButerin) August 9, 2022
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