Tornado Cash Developer Fails to Mix Himself Out of 64-Month Prison Sentence

TheOost-Brabant district court in the Netherlands has sentenced Alexey Pertsev,co-developer of the popular cryptocurrency mixing tool Tornado Cash, to 64months in prison for his role in creating and maintaining the platform.

The courtalleges that Tornado Cash enables "criminal activity and terrorism"by concealing the origin, destination and ownership of the crypto transactions.

Tornado Cash Developer Sentencedto 5 Years and 4 Months Behind Bars

Pertsev,along with two other individuals, developed Tornado Cash to offer privacysolutions for the crypto community. However, the court's investigation revealedthat the tool allegedly facilitated the laundering of approximately $1.2billion to $2.2 billion in Ethereum (ETH), derived from various thefts andhacks.

DespitePertsev's assertion that Tornado Cash was not designed to facilitate criminalactivities, the court determined that the tool was actively used for moneylaundering. The court highlighted that Pertsev and his co-founders wereaccountable for the operation of Tornado Cash and its "lack of measures toprevent abuse," stating they developed it with full knowledge of itspotential for illicit use.

Tornado Cash dev ruled liable for all illicit use, despite no ability to prevent it We'll break down both the ruling itself and the craziness of the precedent set here by the case against Alex Pertsev, a developer and co-founder of the @TornadoCash project pic.twitter.com/wRycZZGiBk

A cryptomixer, also known as a cryptocurrency tumbler, is a service that mixes varioustransactions to obscure the origins and destinations of crypto assets. Thisprocess enhances privacy and anonymity for users by breaking the link betweenthe sender and receiver of a transaction.

The courtpointed out that approximately $450 million in cryptocurrency, stolen by theNorth Korean hacking group Lazarus in the "Axie Infinity hack," wasfunneled through Tornado Cash and laundered, underscoring the tool's"significant value to the criminal underworld."

In additionto the prison sentence, the court decided not to return Pertsev's seizedPorsche and roughly 1.9 million in cryptocurrency.

The firstissues for Tornado Cash began in 2022 when the platform was blacklisted in theUnited States.

Here's the list of Tornado Cash resources that were banned- Tornado Cash @GitHub organization- personal @GitHub accounts of TC contributors- all $USDC on Tornado Cash contracts @circlepay - @infura_io RPC- @AlchemyPlatform RPC- https://t.co/SHvgEjTOMV domain @eth_limo

Separate Case in the US

RomanStorm, another co-founder of Tornado Cash, was arrested in the United Stateslast year, while the third co-founder, Roman Semenov, remains a fugitive andfaces money laundering charges.

FinanceMagnates reportedin August 2023 that Storm had been charged in the US with assistingcriminals, including hackers linked to the North Korea-associated LazarusGroup, in laundering over $1 billion in illicit funds. The Federal Bureau of Investigation (FBI) arrested Storm in Washington.

The USDepartment of Justice charged Semenov with conspiracy to commit moneylaundering, sanctions violations, and operating an unlicensedmoney-transmitting business. According to the agency, the executives receivedcomplaints and calls from victims of cybercrimes. Still, they deliberately avoided implementing controls to prevent criminals from using the platform to launderillicitly obtained cryptocurrencies.

Separately,the Treasurys Office of Foreign Assets Control (OFAC) issued a sanctionsdesignation against Semenov, following a similar sanction placed on TornadoCash last year.

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Tornado Cash developer guilty of money laundering

Pertsev has been under arrest in the Netherlands since August 2022 after the United States government blacklisted Tornado Cash.

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YoMix.io Bitcoin Mixer: Everything you need to know

One of the most attractive features of cryptocurrency is the pseudonymity that it gives to users. Being the very first cryptocurrency, Bitcoin has become the torch bearer of this characteristic. However for bitcoin to be truly and completely anonymous, there are various tools that need to be put to use. Bitcoin mixers are one such […]

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Crypto Mixer Operator Found Guilty for Laundering $400 Million

Roman Sterlingov, the operator of the $400 million Bitcoin Fog crypto mixer, was convicted of money laundering and other related charges in the United States yesterday (Tuesday). The verdict came after a four-week-long trial.

Convicted of Operating a Crypto Mixer

The 35-year-old is a citizen of Russia and Sweden and has now been convicted of multiple charges, including conspiracy to launder money, engaging in sting operations to money laundering, running an unlicensed money transmitting business, and violations of the D.C. Money Transmitters Act.

According to the US Justice Department, Bitcoin Fog was one of the longest-running and most prolific Bitcoin money laundering services on the darknet. The platform was operated by Sterlingov from October 2011 to April 2021 and offered services to criminals seeking to hide their illicit proceeds from law enforcement.

The platform moved more than 1.2 million Bitcoin, valued at about $400 million at the time of the transactions. These cryptocurrencies mostly came from darknet marketplaces and were tied to illegal narcotics, computer fraud, and abuse activities, and identity theft. The platform further served purveyors of child sexual abuse material.

The jury further granted forfeiture of seized assets belonging to Bitcoin Fog, including over 1,354 Bitcoin held in the platforms wallet, $349,625 in cash, and other cryptocurrencies seized from the accounts on Kraken.

The Sentencing Is Due

Sterlingov is now looking at a maximum prison sentence of 50 years for all the conviction counts combined. His sentencing has been scheduled for July 15, 2024.

Roman Sterlingov thought he could use the shadows of the internet to launder hundreds of millions of dollars in Bitcoin without getting caught. But he was wrong, said Deputy Attorney General Monaco.

Jim Lee, the IRS Criminal Investigation Chief, stated: Evidence presented at trial clearly showed that the defendant laundered hundreds of millions of illicit funds from the dark web through Bitcoin Fog in an attempt to conceal the origin of those funds.

Meanwhile, the lawyer representing Sterlingov, Tor Ekeland, tweeted about their decision to appeal against the jury verdict.

Guilty verdict in U.S v. Sterlingov. Now we appeal.

The conviction of Sterlingov cements the US authorities stance to go against the Bitcoin mixing services. Earlier, US prosecutors charged Roman Semenov and Roman Storm, the founders of Tornado Cash, another crypto-mixing service. The duo were blamed for laundering about $1 billion in dirty money, and the trial is scheduled for later this year.

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US Senate approves national defense bill that also targets crypto mixers

The United States Senate passed the 2024 National Defense Authorization Act (NDAA) worth $886 billion on the evening of July 27. The bill includes a provision that targets crypto mixers, anonymity-enhancing coins and institutions that are engaging in crypto trading.  The NDAA is a bill that helps authorize how the country’s defense department can utilize [...]

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Wallet tied to Uranium Finance hacker reawakens after 647 days, shifting $3.3M

The hacker has other associated wallets that have also shifted funds to privacy networks such as Aztec.

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What are Crypto mixers? Top Cryptocurrency Mixers 2023

The decentralized nature of cryptocurrencies has contributed to their global popularity. You have complete control over your finances, and neither banks nor governments are ever peeking into your accounts. You might be startled to learn that whenever you use your virtual currency to make a purchase on any website, you leave a trail that can […]

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Tornado Cash left a void, time will tell what fills it — Chainalysis chief scientist

There’s a hole to be filled where Tornado Cash once was, and “junior mixers” are vying for position in the wake of the mixers sanction and ban by the U.S. Treasury.

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Chainalysis Partners with US Regulators to Recover $30m from Ronin Loot

Blockchain analytics and security service provider, Chainalysis has helped in the recovery of $30 million in funds stolen from the Ronin Bridge by the elite North Korean hacking outfit, Lazarus Group. (Read More)

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New Data Shows Majority of Transactions were TOTALLY LEGAL on Now-Banned Crypto 'Mixer' Tornado Cash...

Last week we covered news that the US Treasury Department had sanctioned Ethereum's controversial transaction mixer, Tornado Cash, for allegedly enabling money laundering.

This was only the second time the US government has taken such an action against a crypto mixing site.

In fact, just over 30% of the funds sent to that protocol were used for money laundering, at least according to one blockchain analytics firm. 

Slowmist, which included their findings in a report on blockchain security, using the first 6 months of 2022, they found Tornado Cash received total deposits of 955,277 ETH (worth $1.7 Billion at current prices), with 300,160 ETH being related to potential illegal activity. 

This means that there's no (known) legal issues with approximately 70% of the operations of the platform.

If you read the US Treasury Department's press release announcing the sanction against Tornado Cash, you would have the impression that the site was built for, and only used for illegal purposes.  They described it as “A virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States."

If we go by the estimates of Harvard University Professor of Economics Kenneth Rogoff - up to 34% of printed money is currently being used to facilitate illegal transactions.

But if I had to guess what primary factor was in the US government deciding to officially act against Tornado Cash, it would be the news that North Korean hackers, aka the 'Lazarus Group' were also using the mixer to launder crypto the have been obtaining through various, always illegal methods. 

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Author: Mark Pippen
London News Desk 
Breaking Crypto News

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What are Crypto mixers? Top Cryptocurrency Mixers 2022

The decentralized nature of cryptocurrencies has contributed to their global popularity. You have complete control over your finances, and neither banks nor governments are ever peeking into your accounts. You might be startled to learn that whenever you use your virtual currency to make a purchase on any website, you leave a trail that can […]

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Tornado Cash co-founder reports being kicked off GitHub as industry reacts to sanctions

OFAC issued a statement implying prohibited transactions with Specially Designated Nationals could include "downloading a software patch from a sanctioned entity."

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Crypto Mixer Blender Slapped With Sanction For Its Role In $620M Axie Infinity Hack

Centralized crypto mixer Blender.io got hit with first of its kind sanctions over its alleged role in the infamous $620 million online gaming platform Axie Infinity by the U.S. Department of the Treasury’s Office of Foreign Assets Control [OFAC]. As per the press release, Blender was used in processing over $20.5 million of the stolen […]

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Crypto Mixers are “not inherently illegal” despite their bad rep, says Expert

Crypto Mixers such as the popular Tornado Cash have gained notoriety over the years as criminals used these software tools to launder millions of dollars worth of cryptocurrency. There were several such instances of misuse in the past. Last year, an Ohio native operating a Bitcoin mixer called Helix pleaded guilty to laundering more than $300 million. […]

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Euler Finance hacker returns $5.4M

The hacker who drained $197 million from Euler Finance in the biggest DeFi hack of 2023 so far reportedly returned around $5.4 million in Ether to the company. The funds were sent in three transactions from the hacker's address to Euler Finance's deployer address, but it remains to be seen if the hacker will return the rest of the stolen funds. (Read More)

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International Operation Takes Down Crypto Mixer Chipmixer — Creator Could Face 40 Years in Prison

An international operation has taken down Chipmixer, a cryptocurrency mixing service that allegedly laundered more than $3 billion worth of cryptocurrency, according to the U.S. Department of Justice (DOJ). The operation involved national authorities in the U.S., Germany, Belgium, Poland, and Switzerland — with Europol’s support. International Operation Takes Down Chipmixer The U.S. Department of [...]

The post International Operation Takes Down Crypto Mixer Chipmixer — Creator Could Face 40 Years in Prison appeared first on Crypto Breaking News.

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Hacker moves stolen funds after bounty launch

The hacker who stole $196 million from Euler Finance has transferred $1.65 million through Tornado Cash, after a $1 million bounty was launched. Victims pleaded for return of funds, but the hacker's move to a crypto mixer suggests they may not be swayed. On-chain data shows the stolen funds consisted of DAI, USDC, staked ETH and WBTC. (Read More)

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Euler hacker seemingly taking their chances, sends funds to crypto mixer

Before the move, the hacker apparently refunded at least one victim, leading to a slew of on-chain messages from other purported victims.

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Trump admin unlikely to change Tornado Cash approach, Coinbase warns law firms: Law Decoded

The US Treasury, under a Trump administration, may bring reform to how courts handle crypto mixer-related incidents, following OFACs overreach in the Tornado Cash sentencing.

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Helix mixer operator gets 3 years in prison for money laundering

Larry Harmon laundered 350,000 BTC, but he was treated leniently for his help in jailing Roman Sterlingov.

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