A statement by the Dutch Fiscal Information and Investigation Service, (FIOD) states that a 29-year old man was arrested in Amsterdam for allegedly developing Tornado Cash, an ethereum-mixing application. FIOD accuses the suspect of “concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies.”
Dutch Law Enforcement Places Suspected Tornado cash Dev in Custody. Officials Talk About Future Arrests
Four days ago, the U.S. Treasury Department’s watchdog, the Office of Foreign Asset Control (OFAC), banned the ethereum mixing application Tornado Cash and 44 associated Ethereum-based addresses. The FIOD arrested a unidentified 29-year old man who is being accused of creating Tornado Cash. The press release published by the Dutch authorities notes that the suspect will be brought before a judge and further hints that “multiple arrests are not ruled out.”
Dutch investigators say that since 2019, Tornado Cash recorded a turnover of around $7 billion and law enforcement officials believe “at least one billion dollars’ worth of cryptocurrencies of criminal origin passed through the mixer.” The individual’s identity has not been disclosed by officials in Amsterdam but Dutch authorities stress that “advanced technologies, such as decentralised organisations” are getting extra attention from the FIOD if they are suspected of money laundering practices.
In the FIOD press release, it states:
This organisation is believed to be responsible for large-scale profiteers from such transactions.
Suspect’s Arrest Follows Celebrity Dusting and Github Bans
Following the OFAC announcement on August 8, which included a ban, this arrest was taken. “The following entity has been added to OFAC’s SDN list: Tornado Cash,” OFAC’s Cyber-related Designation report details. Two developers, who worked via Github on the open source Tornado Cash software codebase were then suspended and their commits removed from the repository. Additionally, centralized crypto business operators like Circle froze addresses that were allegedly associated with OFAC’s Tornado Cash ban.
Unusual twist: An anonymous Tornado Cash user sent tiny amounts of Ethereum (ETH) to celebrities and companies after Github assets and suspensions were frozen. Snoop Dogg and Logan Paul were among those who were dusted along with organizations such as the Ukraine Donation Address and sneaker brand Puma.
Puma’s spokesperson said the company received around 0.0.075 ether. “Puma has no business relationship with Tornado Cash and had no prior knowledge of the payment. This matter is currently under investigation,” the Puma spokesperson explained to the Wall Street Journal.
Treasury Official Claims Tornado Cash ‘Repeatedly Failed to Impose Effective Controls,’ OFAC’s Tornado Cash Press Release Mentions the Takedown of the Mixer Blender.io
Brian Nelson, the current Treasury undersecretary for financial intelligence and terrorism, stated Monday that Tornado Cash did not comply with regulations.
“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks,” Nelson said. “[The] Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them,” the Treasury’s investigator added. The mixer Blender.io was also taken down by U.S. officials.
Tornado Cash received a lot media attention. However, Blender.io in May was the first crypto-mixing application approved by OFAC. OFAC also claimed Blender.io was being used regularly to facilitate criminal transactions. According to the Treasury, the Mixer was used by the North Korean hacker syndicate Lazarus Group to conceal $620 Million in stolen crypto funds from Ronin Bridge hack (Axie Infinity). OFAC linked Tornado Cash transactions with Lazarus Group.
In April, OFAC included a handful of crypto addresses on the SDN List. Tornado Cash was also added to the SDN list by OFAC in April. Blender.io was also added to this list. A US citizen was also arrested and sent to prison after violating North Korean sanctions. Virgil Griffith (an ex-ETH developer) was found guilty in one count on conspiracy to violate International Emergency Economic Powers Act. Griffith spoke at a blockchain conference hosted in the Democratic People’s Republic of Korea (DPRK) and Griffith was charged with aiding the enemy after he allegedly gave the DPRK “technical advice on using cryptocurrency and blockchain technology to evade sanctions.”
What do you think about the Tornado Cash situation and the U.S. government’s recent enforcement against the crypto mixing application? Comment below and let us know how you feel about the subject.
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