Alexey Pertsev, one of the main developers of the cryptomixer Tornado Cash, was sentenced to 64 months in prison for his involvement in laundering over $2 billion.
See also: Lazarus uses Tornado Cash again despite sanctions
The 31-year-old Russian national, who faces a prison sentence, was arrested in Amsterdam in August 2022, on charges of concealing financial flows from criminal activities and facilitating money laundering through Tornado Cash.
Tornado Cash is an open-source, fully decentralized cryptocurrency mixer/reverser. It aims to provide anonymity to cryptocurrency holders by accepting deposits and mixing assets between multiple service nodes before allowing withdrawal to a different wallet address than the original one.
Cybercriminals, including the notorious North Korean hacking group Lazarus, have used the platform to hide their money and launder large sums of money from illicit activities. In one case, Tornado Cash was used to launder about $450 million of the $625 million stolen in the Axie Infinity.
For this reason, the US Treasury Department imposed sanctions on the platform in August 2022, while the US Department of Justice charged two founders in August 2023 with one count of conspiracy to commit money laundering and one count of violating the International Emergency Economic Powers Act.
See also: Bitcoin Fog operator convicted of money laundering
According to information from the Dutch authorities, Pertsev received the prison sentence, he was one of the three creators and a key developer of the Tornado Cash platform, actively participating in the project between July 2019 and August 2022.
In his appeal, Pertsev claimed that he only intended to provide privacy for the crypto community and not to break the law by supporting criminal enterprises, adding that he had no way to prevent abuse by users.
The claims were dismissed in court, explaining that Tornado Cash did not include safeguards against abuse and that the developers made no effort to prevent money laundering through the platform, and imposed the prison sentence. In addition, the court highlighted the defendant's lack of cooperation when the investigating authorities contacted him, telling them that there was nothing he could do about it.
As a result, between $1.2 billion and $2.2 billion from at least 36 separate transactions were laundered through Tornado Cash, which effectively concealed the perpetrators' identities from law enforcement and made it more difficult to freeze assets.
See also: Hackers are turning to centralized exchanges for crypto attacks
Money laundering is the process by which illegally obtained money is transformed into seemingly legitimate income. This process allows criminals to enjoy their profits without the risk of their illegal activities being discovered. The money laundering process usually involves three main stages: placement, layering and incorporation. In the placement stage, the illegal money is introduced into the financial system, often through deposits in banks or the purchase of assets. In the layering stage, the money is moved through a series of financial transactions to remove it from its original source. This may include transfers between bank accounts, investments in various financial products or even international transfers. In the final stage of incorporation, the money is reintroduced into the economy as seemingly legitimate income. This may be through the purchase of real estate, investment in businesses or other legitimate economic activities.
Source: bleepingcomputer
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