The Tornado Cash chronicle unfolds.
Authorities in the Netherlands apprehended a man suspected to be a Tornado Cash developer in Amsterdam on Wednesday.
The Fiscal Information and Investigation Service said that the unidentified 29-year-old man was reportedly involved in money laundering via the decentralized Ethereum mixer Tornado Cash.
In the Netherlands, FIOD is the body in charge of investigating financial fraud and other connected offences.
FIOD initiated its investigation in June, although multiple arrests cannot be ruled out. The investigation is spearheaded by the Public Prosecutor’s Office that is in charge of serious fraud, environmental crime and asset seizure.
The suspect will appear before an investigating court in Den Bosch on Friday, according to the FIOD.
Tornado Cash: On Obscurity And Money Laundering
Tornado Cash is a cryptocurrency mixing service. The online platform enables users to mask the origin or location of cryptocurrency transactions.
When a person deposits funds to Tornado, they can withdraw their funds to a different location, making it far more difficult to trace their transactions.
Such mixing providers frequently do not or only minimally verify the unlawful origin of cryptocurrency. The majority of users of a mixing service do so to increase their obscurity.
Image: Bloomberg.com
The U.S. Treasury sanctioned Tornado last week, prompting significant outcry from the cryptocurrency community. Several crypto companies, including dYdX and Circle, have barred users that employ the crypto mixer.
In June 2022, the Financial Advanced Cyber Team of the FIOD initiated a criminal investigation against Tornado Cash.
Tornado Cash has allegedly been used to camouflage large-scale illegal money flows, including crypto hacks and scams, according to the FACT.
U.S. To Crack Down On Crypto Mixers And Dirty Money
Meanwhile, U.S. Secretary of State Anthony Blinken disclosed that the government would continue to crack down on criminals’ use of crypto mixers to move dirty money.
Similar to FIOD, the Office of Foreign Assets Control of the U.S. Treasury Department stated that Tornado Cash enables cybercriminals to launder money. On August 8, OFAC added Tornado Cash and its smart contracts to their list of restrictions.
Due to prohibitions, it became unlawful for U.S. citizens and organizations to connect with Tornado Cash’s smart contract addresses. Willful violation can result in fines ranging from $50,000 to $10 million and 10 to 30 years in prison.
According to reports, FIOD is also providing “special attention” to decentralized autonomous organizations (DAOs) that may act as conduits to money laundering.
Vitalik Buterin, co-founder of Ethereum, claimed he used Tornado Cash to donate to Ukraine in order to safeguard the beneficiaries’ financial anonymity.
Crypto total market cap at $1.1 trillion on the daily chart | Source: TradingView.com Featured image from Hcamag.com, Chart from TradingView.com