Crypto Laundering Suspect’s Arrest Grills Tornado Cash
Dutch authorities have arrested a 29-year-old man in Amsterdam for concealing illegal financial flows and aiding in the laundering of crypto through the cryptocurrency service Tornado Cash. The individual dubbed the “creator” of the service was arrested in Amsterdam on August 10. According to a Friday statement by the Dutch Tax Information and Investigation Service, or FIOD, officials had not ruled out the possibility of multiple arrests.
Tornado Cash is a cryptocurrency mixing service. The internet service allows users to conceal the origin or destination of cryptocurrency transactions, thereby enabling crypto laundering. The (criminal) origin of crypto-currencies is often not or little verified by these mixing services. Most users of a mixing service do this to increase their anonymity. This year, hackers have used it in several high-profile heists, including the $600 million operation of a platform connected to the Axie Infinity blockchain game. As a result, he developed a dubious reputation.
In June 2022, FIOD’s Financial Advanced Cyber Team (FACT) opened a criminal investigation against Tornado Cash, a decentralized online currency based on an autonomous organization (DAO). A DAO is an organization without a hierarchical decision-making structure, such as a board of directors. Instead, decisions are made based on member votes. In a so-called smart contract, decisions are encoded in computer programming. Using these smart contracts, the operations of the DAO are also carried out.
FACT has reason to believe that Tornado Cash has been used to mask large-scale illegal money flows, including (online) cryptocurrency theft (known as crypto hacks and scams). This includes amounts stolen through hacking by an organization suspected of having ties to North Korea. According to FACT, Tornado Cash started operations in 2019 and has already generated at least $7 billion in revenue. Investigations revealed that a minimum of $1 billion worth of illicit coins passed through the mixer. It is suspected that the individuals behind this organization profited greatly from these deals.
The arrest came after the US Treasury Department imposed sanctions on Tornado Cash on Monday, saying hackers were using the service to launder more than $7 billion in virtual assets. A Treasury official said Lazarus, an organization affiliated with North Korea, laundered about $450 million through the program.
News of the sanctions has spread throughout the bitcoin industry, sparking widespread discussion about the limits governments face when trying to regulate the use of cryptocurrency services. Many in the bitcoin industry have supported Tornado’s usefulness as a technology that provides secrecy for legitimate transactions despite its reputation among hackers.
Crypto anti-fraud startup Sardine’s chief strategy officer Simon Taylor commented on this instance of crypto laundering, said it seems to scapegoat the wrong people for the right reasons and hopes it doesn’t. is not the case. He added, “I don’t think anyone wants North Korea to be able to hack and scam consumers and get away with it,” he said. “But we’re not solving that by shutting down developers who create privacy tools. We work with them. This risks hijacking crypto from governments. What until now was meeting and legitimizing.
First of all, thank you for your valuable time reading the stories (without paywalls) I post on Startups to Enterprises covering the EU, China, the United States, and India. Second, I ask that you contribute financially (any amount) to help me maintain this as an independent digital news outlet.
If I get a sponsored post request, I make sure I see significant merit for erudite and informed readers like you. In the market, I am losing sponsorships in which I need funds to support this effort. Your contribution helps me stay afloat.
Please note that your contribution is treated as generated income and not as a donation; therefore, there are no 80G or other donation certificates. In fact, as I am eligible to pay the income generated, I will pay taxes on it.
You deserve to know that I follow journalistic ethics and practices to ensure I tell the stories as they are, without bias. You can follow us on Facebook, LinkedIn, and Twitter, tag us on Google News, and finally, PayPal us here.