Cryptocurrencies

The cryptocurrency community has rallied around the developers of the former cryptocurrency mixing service Tornado.

The cryptocurrency community has rallied around developers of defunct cryptocurrency mixing service Tornado Cash, who have been accused of money laundering, violating sanctions and running a money transfer business. unlicensed money – one of whom has already been convicted and sentenced to prison.

Following the arrest of Tornado Cash co-founder Roman Storm and developer Alexey Pertsev, the cryptocurrency community came together to found JusticeDAO, an advocacy group aimed at raising funds for the legal defense of those arrested.

The group has raised over 654 Ethereum (ETH), worth $2.3 million at press time, through a fundraising campaign called “Free Alexey & Roman” on decentralized platform Juicebox. The fund also raised 70 ETH via the JusticeDAO page.

Alexey Burtsev and Roman Sturm Legal Defense Fund. source: Juice box

Juicebox has released a publicly available spreadsheet to track Free Alexey & Roman Fund spending. According to the data, the fund spent $1.39 million on legal fees between December 2023 and May 2024. The fund plans to spend another $2.8 million over the next five months and another $400,000 on research. experts and additional legal fees, with total fees expected to reach approximately $3.35 million in 2024.

The fund includes significant contributions from Ethereum co-founder Vitalik Buterin, himself a privacy advocate who has published numerous research and proposals aimed at improving privacy on Ethereum.

Defenders of the cryptocurrency community say that creating ways to protect financial privacy – such as through a cryptocurrency mixer – is not a crime. But organizers disagree.

Despite help from the cryptocurrency community, Tornado Cash founders face serious charges.

Tornado Cash founder appeals rejection

In 2022, the US Treasury alleged that notorious criminals used Tornado Cash to launder more than $7 billion in crypto assets over a period of approximately three years.

a A year later, in August 2023, the platform’s founders, Storm and Roman Semenov, were charged with money laundering and sanctions violations. Storm was arrested by the United States Federal Bureau of Investigation that same month, while Semenov was placed on the Treasury Department’s Office of Foreign Assets Control sanctions list.

Storm faces three charges: conspiracy to launder money, conspiracy to operate an unlicensed money transmitting company, and conspiracy to violate the International Emergency Economic Powers Act. He has pleaded not guilty to all charges.

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Storm’s legal counsel appealed the dismissal of the money laundering charges, arguing that they are “fatally flawed” and should be dismissed, since Storm cannot control or prevent sanctioned entities from using the crypto mixer -cash.

Storm’s lawyers argued that Tornado Cash was developed and made available to the public before sanctioned hackers had a chance to use it.

In May 2024, a Dutch court found Burtsev, developer of Tornado Cash, guilty of money laundering and sentenced him to five years and four months in prison for laundering $1.2 billion in illicit assets on the platform.

Developers should pay attention to end use

The case has raised questions about how programmers can be held legally responsible for the end use of the tools they create.

Josh Garcia, partner at Ketsal – a law firm specializing in fintech, Web3 and consumer financial services – believes that while it is wise to get developers to think about the consequences of their code, it is difficult for a small group of developers to plan all foreseeable criminal uses for their programs.

Gracia told Cointelegraph that the Dutch court’s ruling would force Dutch developers to remain anonymous or pseudonymous rather than risk criminal liability for creating the software.

“Some developers may give up altogether, for fear that the United States will follow suit. “For developers who want to continue their development efforts, the Dutch approach could force them into hiding,” he added.

Garcia believes that the consequences of the Dutch approach could extend beyond blockchain technology. He questions whether the CEO of a 3D printer manufacturer should worry about criminal liability if one of its users prints a gun in a jurisdiction where guns are banned.

“If Dutch sentiment carries over to the United States and free speech advocates cannot argue that code is speech protected by our First Amendment, many developers will go underground, not just in the blockchain but in any area with a potential threat of criminal liability. » . “This would be a huge step backwards for the blockchain community in general,” he said.

Rebecca Liao, co-founder and CEO of development platform Web3 Saga and Harvard Law School graduate, believes the problem isn’t just about writing code.

She told Cointelegraph that the US legal system requires more than just the “act of writing code” to constitute a criminal offense: it requires individuals to demonstrate criminal intent.

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“In the Tornado Cash case, the prosecution aimed to prove that the developers intentionally facilitated illegal activities, and the court ultimately accepted this argument. She explained that in general, these lawsuits suggest that developers should be vigilant about possible misuse of their creations and implement safeguards to avoid legal repercussions, and that the organizations they work for should put have processes in place to support them.

The upcoming Storm trial will be a crucial case for the cryptocurrency industry, especially for privacy-focused services. Burtsev’s trial in a Dutch court has already sent shockwaves through the cryptocurrency developer community, and legal experts predict it will put unprecedented pressure on developers working on similar projects in the near future.

Jimmy Wright, founder of the Wright law firm, told Cointelegraph that historically, cases involving technology and criminal intent often result in harsh penalties due to “the perceived threat these technologies pose to financial and regulatory systems.” “. He noted that in the case of Tornado Cash, the future will largely depend on whether courts view the actions as “neutral technological advancement or as intentionally enabling illegal activities.”

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