Tornado Cash and The Waves of Debate

In August 2022, Dutch police apprehended Alexey Pertsev, an until-then obscure Russian. Pertsev had been affiliated with Tornado Cash, a service aimed at anonymizing transactions using ether (ETH) and ether-tokens. He stands accused of enabling money laundering through this so-called mixer.

Pertsev's arrest spurred debates both in and outside of the Netherlands. Central to the discussions: What role did Pertsev play for Tornado Cash? Was he merely coding and publishing, or did he directly assist users? Is Tornado Cash a legitimate business or a decentralized protocol, exempt from conventional regulations? Though we await answers as the trial doesn't begin until 2024, Pertsev remains free till then.

However, the debate reignited this week. Roman Storm, the "co-founder" of Tornado Cash, was detained by the FBI, but soon released on bail. Another developer, Roman Semenov, has made the sanction list. Currently in Dubai, he remains elusive to the Americans due to a lack of an extradition treaty. Both developers face lawsuits centralizing on money laundering facilitation allegations.

In the United States, the freedom of speech principle runs deeper than in the Netherlands. Hence, publishing code can fall under this umbrella. The arrest of Storm, therefore, raises eyebrows. If he just published code, defending this right becomes paramount. Coin Center director, Peter van Valkenburgh, anticipates this angle, dubbing it a "dangerous lawsuit; it could criminalize code publication".

However, had the developers simply written and shared code on GitHub, arrests might have been avoided. The US prosecutor believes they consciously abetted money laundering, including funds from North Koreans. If true, Storm and Semenov will find upholding their constitutional rights challenging. Their engaged lawyers will ardently seek inconsistencies in these claims. We'll be tracking the case closely!