Netherlands: prison sentence for founder of Tornado Cash charged with money laundering 

Judges found Alexey Pertsev responsible for the malicious uses of his cryptocurrency tumbler, even though he was not their instigator.

In mid-May 2024, a Dutch court sentenced Alexey Pertsev, one of the three cofounders of the cryptocurrency tumbler, Tornado Cash, to five years and four months in prison for money laundering. Judges also seized a luxury car and 1.27 million euros in financial assets belonging to the Russian national residing in the Netherlands. 

Alexey Pertsev built his defense around the fact that Tornado Cash was not designed to launder money, but as a “legitimate privacy solution.” Indeed, a tumbler makes it possible to mix cryptocurrencies from various sources to render them potentially untraceable. Tornado Cash thus protects the identity of owners, and provides effective protection against theft. 

Yet cybercriminals also understood how to take advantage of the service. According to the Dutch judges, nearly 2.2 billion dollars (2 billion euros), or 30% of all funds deposited on Tornado Cash, comes from questionable sources. And the figure is “probably underestimated.”

The defense argued that Tornado Cash was now run by a decentralized protocol, out of the control of its founders. However, judges deemed Alexey Pertsev fully responsible for the criminal use of his service, especially as such a use was predictable. Moreover, the tumbler’s operators failed to implement any effective measures to prevent money laundering. 

Tornado Cash was banned in the United States in 2022. On August 23, 2023, the US justice system issued an indictment against Roman Storm and Roman Semenov, the tumbler’s two other founders. US law enforcement arrested the former in the state of Washington. His trial should take place by the end of 2024. The latter is on the run and currently in the United Arab Emirates.
Tornado Cash is still running today however. The Dutch judges recognized its shutdown was now “virtually impossible.”