Many believe the decision would have a “chilling impact” on open-source initiatives that assigning user privacy.
Alexey Pertsev, a 31-year-old Russian who built the crypto mixing platform Tornado Cash, was found guilty by a court in ‘s-Hertogenbosch, Netherlands, of moving $1.2 billion in illegal assets.
On Tuesday, the three-judge panel will likely hand down a punishment to Pertsev; his attorneys will have fourteen days to file an appeal.
Experts predict that the decision would have a “chilling effect” on the creation of open-source software that gives users financial privacy features, which might have far-reaching consequences for the future of privacy in decentralized banking.
Prosecutors said that Pertsev didn’t do enough to stop criminals from using Tornado Cash during his March trial, but the defense argued that Pertsev couldn’t be liable for the acts of anonymous, independent users because the platform’s smart contracts were open-source and automated.
To address the privacy concerns associated with unchangeable public records, Tornado Cash is a decentralized system that aims to obscure Ethereum blockchain transaction histories.
Regardless of this explanation, the prosecution argued that platforms should not assist sanctioned organizations (such North Korean cybercrime groups) or criminals in hiding the source of stolen funds, and they ruled that technical considerations should not supersede legal requirements to do so.
Despite allegations that Tornado Cash lacked leadership, public prosecutor Martine Boerlage said that the organization was managed in a businesslike manner.
North Korean cybercrime organization Lazarus Group was a major abuser of the protocol, using the site to launder crypto from hacks and heists totaling over $7 billion, according to the US Office of Foreign Assets Control.
Efforts to advocate for, petition, and try to finance Pertsev’s legal bills have garnered support from the crypto sector. At trial on September 23, fellow Tornado Cash creator Roman Storm will face similar accusations in the United States. The guilty conviction against Pertsev may portend Storm’s destiny, according to experts.
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