A few days after the popular cryptocurrency mixer Tornado Cash was sanctioned by the US Treasury, Dutch authorities arrested an alleged developer suspected of involvement with the mixer. The arrest took place last Wednesday (10), two days after the US sanctioned the service.
According to a statement from the Dutch Tax Information and Investigation Service (FIOD), the 29-year-old, whose name has not been released, was arrested in Amsterdam.
The suspicion is that the man helped hide financial resources from criminals, facilitating money laundering through the mixer.
“These advanced technologies, such as decentralized organizations that can facilitate money laundering, are receiving extra attention from FIOD,” the agency said. “Multiple arrests are not ruled out.”
Also in the statement, the agency said the people behind Tornado Cash profited significantly from transactions on the mixer.
“Tornado Cash started in 2019 and, according to FACT, has achieved a turnover of at least seven billion dollars. Investigations showed that at least a billion dollars worth of cryptocurrencies of criminal origin passed through the mixer. The people behind this organization are suspected to have made large-scale profits from these transactions,” the FIOD said.
What is Tornado Cash?
Tornado Cash is a decentralized application, or DApp, that mixes crypto transactions on the Ethereum blockchain. That is, it makes it difficult to trace the origin of transactions and funds.
While its purpose is to ensure users’ privacy, this mixer gained fame after hackers started using it to hide stolen funds in attacks.
Today, it is estimated that BRL 2.2 billion in assets such as stablecoins, ETH and WBTC are in Tornado Cash smart contract addresses.
Tornado Cash Sanction
As reported by CriptoFácil, the US sanctioned Tornado Cash last Monday (8). In addition, authorities have included 44 Ethereum and USDC wallets in the list of Specially Designated Nationals.
The wallets in question include the smart contract that runs Tornado Cash and the Tornado Cash donation wallet.
As a result of the ban, all citizens of the country are banned from carrying out operations through the service. In addition, any wallet address that used Tornado Cash became the target of sanctions. That is, addresses will not be able to perform or receive transactions to and from any company or person residing in the US.
The day after the sanction, mixer co-founder Roman Semenov was kicked off GitHub. In addition, USDC stablecoin issuer Circle froze more than BRL 380,000 in funds from wallets linked to Tornado Cash.
Subsequently, the platform for buying and selling NFTs OpenSea began to ban wallets of users who interacted, in any way, with the mixer. According to reports shared on Twitter, OpenSea is claiming that these accounts go against the company’s Terms of Service. However, the company does not mention the US sanctioning of the cryptocurrency mixer as a reason for this.
After the sanctions, deposits in the protocol decreased a lot and there was a big increase in withdrawals. According to The Block, about 15% of the assets held by the protocol have already been withdrawn.
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