Almost two years ago to the day, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced they’d be shutting down Tornado Cash. Its co-founder, Alexey Pertsev, found himself in trouble and was sent to prison. It’s been an unending battle since, and now the developer is asking for up to $1 million in funding to lodge an appeal against his Netherlands charges. This comes at the same time as OKX announces its crackdown on those who used Tornado Cash previously.
Key Insights
- OKX to deactivate accounts involved with sanctioned entities like Tornado Cash and Garantex.
- OKX CEO Star Xu confirmed the platform’s strict adherence to compliance with international sanctions since OKX allowed the withdrawal of clean funds before blocking the account.
- Tornado Cash has seen a resurgence in 2024, with $1.9 billion in deposits, despite US sanctions.
- Developer Alexey Pertsev was sentenced to 64 months in prison for money laundering linked to Tornado Cash.
- Pertsev’s conviction has caused outrage, with many viewing it as a troubling precedent for the crypto industry.Pertsev was accused of laundering $1.2 billion and failing to prevent the misuse of Tornado Cash by criminals.
- Pertsev’s appeal for additional funding to fight his conviction is ongoing, with significant support from the crypto community.
Alexey Pertsev, a Russian national and co-founder of Tornado Cash, was sentenced to 64 months in jail for his involvement in money laundering. The developer remains incarcerated by Dutch authorities after his bail request to prepare for an appeal was denied in July.
The Twitter support account for Pertsev appealed to the public on behalf of the developer for assistance with funding to appeal the court ruling. The post noted that the developer was facing an expensive appeal against a ‘’government willing to use all of their resources to persecute him.”
According to the post, Pertsev urgently needs an additional $750k to $1M USD to cover his ongoing legal fees. Members of the crypto community were urged to donate to his cause using fiat or Ether. So far, the community has raised 15.5 ETH.
What We Know About the Incident
On August 10, 2022, Russian developer Alexey Pertsev was arrested in the Netherlands on an indictment order accusing him of laundering $1.2 billion worth of crypto through a crypto-mixing tool called “Tornado Cash.”
Tornado Cash was a Bitcoin-focused privacy service used to “Mix” Ethereum as a way to make it virtually untraceable. It wasn’t your ordinary cryptocurrency service, and with the promise of untraceability and anonymity, it attracted the wrong crowd. Roman Semenov, Roman Storm, and Alexey Pertsev were the developers behind this project.
The indictment order alleged that Pertsev acted in association with one or more developers and allegedly “made a habit of committing money laundering.” He was then subsequently imprisoned shortly after U.S. authorities blacklisted Tornado Cash for its involvement in anonymizing funds for the North Korean cyber criminals “The Lazarus Group.“
The indictment order, which the prosecutor read at Pertsev’s trial, listed close to 40 transactions totalling 535,809 ETH originating from other central exchange platforms. The largest amount of ETH came from Axie Infinity’s Ronin network, which was hacked in 2022 by North Korean “The Lazarus Group.”
Dutch authorities alleged that Pertsev and his associates should have suspected the funds to be of criminal origin. During Petrsev’s 2023 hearings at an ‘S-Hertegonbosch court, he was accused of routinely laundering more than 500,000 Ether from criminal origins.
On May 14th 2024, Pertsev was found guilty of money laundering by the ‘s-Hertogenbosch Court of Appeal. The court sentenced him to five years and four months in prison based on the allegations that he knowingly laundered money to the value of $1.2 billion in illicit assets.
For those looking to support Pertsev, there are two ways to donate: ETH and fiat via WeWantJusticeDAO https://wewantjusticedao.org ETH via @juiceboxETH with the chance to grab an exclusive NFT from our latest collection.
OKX Issues Warning to Previous Tornado Cash User
OKX has announced plans to deactivate accounts linked to sanctioned entities, including the crypto mixer Tornado Cash and the Moscow-based exchange Garantex. The platform’s CEO, Star Xu, emphasized OKX’s commitment to complying with international sanctions, warning that any transactions involving these entities will trigger compliance controls, resulting in account termination. The move follows reports of users, such as Satoshi Friends, facing blocked accounts and frozen assets due to transactions with sanctioned exchanges and DeFi protocols.
Despite being sanctioned by the U.S. government in 2022, Tornado Cash has seen a significant resurgence in 2024, with over $1.9 billion in deposits by mid-year, a 50% increase from the total in 2023. This revival is largely driven by hackers using the platform to launder funds from major exploits, despite the initial sharp decline in activity following the sanctions imposed by the Office of Foreign Assets Control (OFAC).
Star Xu: “As a 12-year global crypto platform, we take care of our reputation and the safety of customers’ funds as our life. We don’t make any money from freezing accounts and never steal 1 dollar from any customer’s funds. At the same time, we are required to comply with applicable sanctions policies including US sanctions.”
Pertsev’s conviction and sentencing weren’t the only news circulating for Tornado Cash users. OKX on Aug 9th issued a statement warning its users that it would be deactivating all its accounts involved with sanctioned entities such as Tornado Cash and Garantex.