On May 24, Alexey Pertsev, the founder and CEO of PepperSec, the software company behind Tornado Cash faced a pre-trial hearing after his arrest by FIOD, Dutch Fiscal and Information Service in 2022.
Pertsev was granted permission to cross-question Chainalysis, the leading Web3 analytics company, about the methods he used while working on Tornado Cash. Although the next hearing was scheduled for September, the litigation is likely to drag on into next year.
Pertsev was pleasantly surprised by the unexpected decision of the Dutch court, as his lawyer Keith Cheng told CoinDesk.
In its press release, FIOD reported that Pertsev was "suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralized Ethereum mixing service Tornado Cash."
The service also stated that "FACT [Financial Advanced Cyber Team] suspects that Tornado Cash has been used to conceal large-scale criminal money flows, including from (online) thefts of cryptocurrencies (so-called crypto hacks and scams). These included funds stolen through hacks by a group believed to be associated with North Korea."
The official Tornado Cash community website claims that the US ban on Tornado Cash, which came a few days before Pertsev's arrest, “ultimately labels all active users for seeking individual anonymity on-chain as criminals. The sanctimonious ideology that privacy should be only for the selected ‘faithful’ few has huge implications for discrimination enacted through censorship. Privacy is an individual right that everyone should be entitled to.”
The outcome of Pertsev’s lawsuit is of particular interest to software developers because it could set a precedent for holding other programmers accountable for their code.
"It’s a really important case because many, many people write code that other people might use for good or bad purposes," Inbar Preiss, a journalist at Web3 news platform DLNews, noted.
Pertsev and his lawyer may hope to convince the judge that the developer cannot be held responsible for the way others use Tornado Cash, especially since many of them have in fact used it to protect their freedom rather than to hide illegal earnings. However, this might not matter if Dutch prosecutor Martine Boerlage manages to prove that Pertsev and his team were not just developers, but were actually running Tornado Cash as a business and were aware of the suspicious sources of cryptocurrency processed through their platform.
Meanwhile, Tornado Cash itself fell victim to a malicious actor who gained control of its governance last weekend.
Although the hacker proposed to reverse the attack, today, blockchain security firm CertiK detected the movement of significant funds related to the attack. "We are seeing the movement of funds from EOA 0x0921 which is connected to the $1.1 million Tornado Cash governance attack. The EOA transferred 24 ETH to EOA 0xbfFe," the CertiK Alert account informed the Twitter community in a post.