According to FIOD, the management of the service was profiting from the deals of criminals to launder cryptocurrencies obtained through hacks

Alleged Tornado Cash developer arrested in the Netherlands

12.08.2022 - 13:35

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2 min

What’s new? Law enforcement authorities of the Netherlands have arrested the alleged developer of the Tornado Cash crypto mixer. The man was detained in Amsterdam: he is suspected of involvement in money laundering and concealing financial flows through the sanctioned service. This was reported by the local Fiscal Information and Investigation Service (FIOD).

Information on the FIOD website

How did events develop? The agency began investigating Tornado Cash back in June 2022 because it believes the mixer was used to launder cryptocurrencies stolen through hacks, including those organized by North Korean hackers. FIOD added:

“Investigations showed that at least one billion dollars' worth of cryptocurrencies of criminal origin passed through the mixer. It is suspected that persons behind this organisation have made large-scale profits from these transactions.”

Representatives of the US Office of Foreign Assets Control (OFAC), having put the service on the sanctions list on August 8, noted that more than $7 billion had been laundered through it since 2019, including the DPRK group Lazarus.

On August 12, Watcher Guru noted that Tornado Cash's Discord server had been deleted.

What is known about Tornado Cash? It is a non-custodial protocol for anonymous transactions. The decentralized platform ensures the confidentiality of transfers by interrupting the standard chain between sender and recipient addresses.

Circle, the issuer of the USDC stablecoin, froze more than 75 000 coins linked to the sanctioned addresses after the restrictions were imposed. On August 10, the dYdX exchange blocked users whose addresses interacted with the service. Tornado Cash deposits dropped 79% from the previous week, and the amount of cryptocurrency stored on the service decreased by 15%.

For expert opinions on the dangers of interacting with sanctioned services such as Tornado Cash, see GetBlock Magazine's article.

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