Tornado Cash developer to remain in jail until February 2023: Dutch court

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A court in the Netherlands has ordered that Tornado Cash developer Alexey Pertsev must remain in custody until at least February 2023.

The three-month extension of his detention by the court comes after the preliminary court hearing at the Palace of Justice in ‘s-Hertogenbosch. During the hearing, the prosecution painted Pertsev as the mastermind behind the laundering of billions of illicit funds through his creation.

Public prosecutor Martine Boerlage hit Pertsev with a new money laundering charge while disregarding the defense’s arguments.

“If you peel everything off, what we have here is a fairly clear-cut money-laundering case,” said Boerlage as he hinged the bulk of his argument on existing anti-money laundering (AML) laws.

“If you, as a bank, do not know where the money is coming from and haven’t yet built in any mechanism to look at that, then there’s a considerable likelihood that your service is laundering money,” said Boerlage. The prosecutor refuted claims that the software was autonomous, telling the court that Pertsev and his co-founders had de facto control over the operations.

By the end of the preliminary hearing, the court decided to extend Pertsev’s 103-day stay in custody by another three months, a decision that has not gone down well with the defense team. Perhaps, its decision was buoyed by the prosecution’s argument that Pertsev was a flight risk given the severity of the alleged offenses.

“I’m disappointed about the decision from the court,” said WK Cheng, head of Pertsev’s defense. “We’ve tried to explain as clearly as possible what the standpoints are from the defense.”

“We are going to do some requests; we’re going to do some investigations, things that we need to work out to have cleared up. And we’re going to try to prepare for the next court session,” Cheng said at the end of the hearing.

Pertsev’s arrest cooked up a storm in digital currency ecosystem

The trouble began for Pertsev after the U.S. Treasury sanctioned Tornado Cash, a virtual currency mixing service designed to allow users to hide the details of transactions. The move by the U.S. financial agency comes on the heels of multiple uses of the service by bad actors, including Russian and North Korean hackers.

Pertsev was arrested in the Netherlands shortly after the sanctions were announced, but his detention sparked an uproar in the crypto industry. Several crypto influencers have slammed the move on the grounds that using an open-source code created by Pertsev does not confirm his guilt.

Others have pointed at the failure of security agents to arrest the founders of Terra, Three Arrows Capital (3AC), and FTX for costing investors billions of dollars in losses.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.