Netherlands Crime Agency Arrests "Suspected Developer" of Tornado Cash

The Tornado Cash saga continues in the wake of the U.S. Treasury Department's ban.

Netherlands Crime Agency Arrests "Suspected Developer" of Tornado Cash
Shutterstock cover by S.Borisov

Key Takeaways

  • Dutch authorities have detained a 29-year-old "suspected developer" of Tornado Cash in Amsterdam.
  • The Fiscal Information and Investigation Service published a statement saying the detainee is suspected of faciliating money laundering, adding that more arrests "are not ruled out."
  • It follows the Treasury Department's move to sanction the Ethereum mixing protocol this week.

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Dutch authorities have arrested a 29-year-old man they believe was involved in developing Tornado Cash.

Suspected Tornado Cash Developer Detained

The Fiscal Information and Investigation Service has weighed in on the Tornado Cash saga following the Treasury Department’s unprecedented move to sanction the protocol.

The Dutch financial crime agency posted an update Friday confirming it arrested a “suspected developer of Tornado Cash” in Amsterdam on August 10.

Though FIOD did not confirm the suspect’s identity, it said that a 29-year-old man had been brought before an examining judge. The post also said that he had been detained on suspicion of facilitating money laundering via Tornado Cash. An excerpt read:

“On Wednesday 10 August, the FIOD arrested a 29-year-old man in Amsterdam. He is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralised Ethereum mixing service Tornado Cash.”

FIOD’s Financial Advanced Cyber Team said that it had been investigating Tornado Cash since June 2022, adding that multiple arrests “are not ruled out.”

Tornado Cash is an Ethereum-based protocol that helps users preserve privacy by obfuscating their transaction history. It’s one of Ethereum’s most popular protocols as it offers a way to move cryptocurrencies without compromising on privacy, something that usually isn’t possible when transacting between regular addresses given the public nature of blockchain technology. When someone makes a deposit to Tornado Cash, they can withdraw their funds from another address, making their tracks much harder to trace.

FIOD’s update comes after the U.S. Treasury Department’s Office of Foreign Assets Control added Tornado Cash and its smart contracts to its sanctions list on August 8. Like FIOD, the U.S. government office said that Tornado Cash had enabled cybercriminals to launder money. The ban blocks all U.S. residents from accessing the protocol, and it was seen as notable because it marked the first time the government had sanctioned a piece of code.

The crypto community widely decried the Treasury’s decision this week, and the fallout has been huge across the space. To date, Circle, GitHub, Alchemy, Infura, and dYdX have all complied with the ban, prompting discussions about centralized weak points defying crypto’s decentralized ethos.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

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