Tornado Cash

Dutch Authorities Arrest Suspected Tornado Cash Money Launderer

  • The United States Treasury Department recently blacklisted several Tornado Cash addresses.
  • The crypto mixer has been used by hackers to transfer funds and mask their identities.

Dutch authorities have reportedly arrested a developer who is suspected of using the Ethereum mixer, Tornado Cash, for money laundering. The arrest of the 29-year-old was announced on Friday by the Fiscal Information and Investigation Service (FIOD), a Dutch organization charged with looking into financial offenses.

Netherland authorities claim that the man, who was arrested in Amsterdam, was involved in assisting illicit financial transfers and money laundering via the recently bannedTornado Cash. Authorities also suspect the involvement of multiple parties in the crime, having begun investigations into Tornado Cash since June.

According to the Financial Advanced Cyber Team (FACT), several hackers have used Tornado Cash to hide and move money gotten from hacks and other crypto frauds. According to the announcement,

These included funds stolen through hacks by a group believed to be associated with North Korea. Tornado Cash started in 2019, and according to FACT it has since achieved a turnover of at least seven billion dollars.

By masking information tracks on the blockchain, Tornado Cash, an Ethereum-based service, enables users to secure their anonymity during crypto transactions. Several key figures in the crypto world have publicly confessed to using Tornado Cash to mask their transfers. For example, Vitalik Buterin, a co-founder of Ethereum, noted that he gave money to Ukraine via Tornado Cash in order to protect the recipients’ financial anonymity.

But the bad appears to have outweighed the benefits of using the mixing service, and recently, the United States Treasury Department added about 45 Tornado Cash addresses to the list of sanctions by the Office of Foreign Asset Control (OFAC).

Afterward, 75,000 USD coins (USDC) connected to addresses that were sanctioned by OFAC were frozen by the popular stablecoin issuer, Circle. The newly-placed ban makes it illegal for anyone to be caught using Tornado Cash’s smart contract addresses. Defaulters will be made to pay fines ranging from $10,000 to $50,000 or face imprisonment.

At the time of the ban, a statement from Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson read,

Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.

Following the ban, an anonymous crypto user began transferring ether from one of the flagged addresses to celebrities and other prominent figures. The action is suspected to be a protest against the ban on the mixing service.

The action by this unknown user has allegedly implicated these high-profile individuals whose wallets have interacted with one of the blacklisted addresses.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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