Dutch Cops Arrest 29-Year-Old Suspected Tornado Cash Developer

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On Fri­day, the Nether­lands Crime Agency (FIOD) arrest­ed a 29-year-old man in Ams­ter­dam sus­pect­ed to be the devel­op­er of Tor­na­do Cash, which was recent­ly sanc­tioned by the U.S. Treasury.

The sus­pect­ed crim­i­nal has alleged­ly been spon­sor­ing illic­it finan­cial flows, mon­ey laun­der­ing, and mix­ing cryp­tocur­ren­cies through a decen­tral­ized Ethereum mix­ing ser­vice Tor­na­do Cash

“Today the sus­pect is brought before the exam­in­ing judge, adding that “mul­ti­ple arrests are not ruled out,” FIOD said

Accord­ing to FIOD, the arrest intends to cut down on cryp­to mix­ers that have swarmed the indus­try and rip­ping off peo­ple bil­lions of dol­lars. It is report­ed that mix­er com­pa­nies have tout­ed the pri­va­cy ben­e­fit of increas­ing the anonymi­ty of trans­ac­tions involv­ing cur­ren­cies like bit­coin and Ethereum, which list trans­ac­tions on blockchain tech­nol­o­gy acces­si­ble to the public.

Cyber­crim­i­nals have also used oth­er ser­vices to laun­der mon­ey, Trea­sury offi­cials said on Mon­day, accus­ing Tor­na­do of fail­ing to block more than $7 bil­lion of dig­i­tal cur­ren­cy from being stolen through hacks by a group believed to be asso­ci­at­ed with North Korea. 

“Despite pub­lic assur­ances oth­er­wise, 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,” said Bri­an E. Nel­son, Trea­sury Depart­ment under­sec­re­tary for ter­ror­ism and finan­cial intel­li­gence, in a state­ment on Monday.

Illicit financial flows

Among the funds alleged­ly laun­dered through Tor­na­do was more than $104 mil­lion of cryp­tocur­ren­cy stolen in two sep­a­rate hacks on cryp­to “bridge” ser­vices Har­mo­ny and Nomad this June and August, respec­tive­ly, Trea­sury Depart­ment offi­cials said. Cryp­to bridges are designed to allow users to trans­fer funds between dif­fer­ent blockchains and have increas­ing­ly become a tar­get for hack­ing in recent months, cyber­se­cu­ri­ty experts say.

The sanc­tions and now arrest has sparked out­rage from the pub­lic, with enthu­si­asts say­ing the gov­ern­ments are going after start-ups that could actu­al­ly be great for the tech­nol­o­gy indus­try. Gov­ern­ments are not focused on the broad­er dig­i­tal cur­ren­cy ecosys­tem that crim­i­nals have used in bids to hide their tracks. 

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