September 24, 2022

Dutch Law Enforcement Arrests Suspected Developer Of Tornado Cash

The Dutch Fiscal Information and Investigation Service (FIOD) issued a statement disclosing that an unnamed 29-year old suspect had been arrested in Amsterdam by law enforcement officials.

It is believed that he is the developer of Tornado Cash, the Ethereum mixing application. The FIOD has accused the suspect of facilitating money laundering and concealing criminal financial flows via crypto mixing.

Tornado Cash

The Office of Foreign Asset Control (OFAC), which is the watchdog of the US Treasury Department, had banned Tornado Cash and 44 other addresses based on Ethereum.

Now, Dutch authorities have revealed that a 29-year old individual was arrested by the FIOD and is suspected of developing the Ethereum mixing application.

According to the press release, the Dutch law enforcement officials intend to present the suspect to a judge and have not ruled out multiple arrests.

According to Dutch investigators, there has been a turnover of about $7 billion via Tornado Cash since 2019.

Law enforcement officials think that almost $1 billion worth of cryptocurrencies that passed through the mixer had a criminal origin.

The arrest

The identity of the individual arrested has not been disclosed by the Amsterdam officials, but authorities added that the FIOD was focusing on advanced technologies suspected of money laundering.

These include decentralized organizations. The press release from the FIOD said that these transactions had been used by people for making profits on a large scale.

The arrest comes after the August 8th announcement by the OFAC about the ban. The watchdog added Tornado Cash to its SDN list.

The accounts of a couple of developers who had worked on the codebase of Tornado Cash via Github were also suspended.

Moreover, crypto companies like Circle also blocked addresses that had associations with Tornado Cash.

Celebrities

But, an interesting thing happened after assets were frozen and account suspensions from Github. Some well-known companies and celebrities received a small fraction of Ethereum from an anonymous user of Tornado Cash.

This fraction is often called dusting and people like Logan Paul, Snoop Dogg, Beeple, and Steve Aoki got dusted, as did organizations like the Ukraine Donation address and sneaker maker Puma.

Puma’s spokesperson disclosed that they had received about 0.075 ether. The spokesperson said that the company is not associated with Tornado Cash and had not been informed about the transaction.

It added that they were investigating the matter. Last Monday, Brian Nelson, the Treasury’s undersecretary for financial intelligence and terrorism talked about Tornado Cash.

He said that it was not in compliance with regulatory policies. Nelson said that it had not imposed controls that could effectively stop money laundering for criminals, despite reassurances.

He added that the Treasury would continue to take action against mixers that assist criminals in laundering virtual currency, along with those who help them.

The authorities in the US had also taken down another mixer called Blender.io due to the same reason. It had been the first crypto mixing app that was sanctioned back in May by the OFAC.

Leave a Reply

Your email address will not be published.