Tornado Cash Developer Alexey Pertsev to Remain in Dutch Custody after Bail Denial

A panel of Dutch judges from the East Brabant Court have ruled that Alexey Pertsev – a top Tornado Cash developer arrested in August last year after the United States sanctioned the crypto mixer – will remain under custody until his next hearing scheduled for April. According to a report by Coindesk, the Judges ruled that Pertsev possesses a high risk of fleeing or interfering with the investigations of being freed on bail. The Russian developers, however, denied the charges citing that Tornado Cash is an open-source code available to anyone with the internet.

Nonetheless, the United States Treasury Department’s Office of Foreign Assets Control (OFAC) argued that Tornado Cash has significantly aided North Korea-based hackers in laundering stolen digital assets. Additionally, the Dutch public prosecutor Martine Boerlage alleged that, rather than merely publishing source code, Pertsev and his colleagues ran Tornado Cash like a business and accepted kickbacks without questions.

According to Pertsev’s lawyer Keith Cheng, the Dutch court is not well informed of the decentralized nature of blockchain technology and the role his client played.

“We had the opportunity to explain the basis for Tornado Cash and why it is not money laundering. It is our opinion that the lack of knowledge is what’s keeping him here. Of course, I’m disappointed that Pertsev won’t be released on bail. He will fight until the end to show the importance of decentralized options, software, and open-source code,” Cheng noted.

According to Dutch law,  it is illegal to conceal or disguise the origin and movement of funds. The prosecutors argue that Tornado Cash placed almost 75 percent of all crime-related crypto on the Ethereum blockchain.

Closer Look at Tornado Cash Activities

The Tornado Cash protocol, which is available on several chains including Ethereum, has been making several updates despite the sanctions by the United States. Typically, a user generates a random key (note) and deposits Ether or an ERC20, along with submitting a hash of the note to the Tornado Cash smart contract. After depositing, users wait some amount of time before withdrawing to improve their privacy.

In order to facilitate withdrawals, a Tornado Cash user submits proof of having the valid key to one of the notes deposited and the contract transfers Ether or the ERC20 to a specified recipient.

The technology has been existing for a long time and Coinbase Global Inc (NASDAQ: COIN) CEO Brian Armstrong has argued the United States Treasury Department did wrong to sanction the technology instead of separating out the bad actors.

As of today, Tornado Cash takes pride in over 3,488,660 Ether deposited by 39,395 unique users.