In the Netherlands, open source developers are now responsible for how their software is used.
Today Alexey Pertsev, a 31-year-old Russian living in the Netherlands and one of the developers of the Ethereum-based privacy tool Tornado Cash, said: was found guilty He was sentenced to 64 months in prison for money laundering by a Dutch court. The fact that Pertsev never controlled the virtual currency flowing through Tornado Cash, or even that he was able to control the operation of the smart contract, was deemed irrelevant by the jury because he contributed to the development of the software. It was deemed that there was.
In line with Dutch prosecutor Martine Boerlage’s opinion, the court ruled that Tornado Cash essentially operated like a business and was founded by Pertsev and his two co-founders, Roman Storm and Roman Semenov. The court ruled that it was operated by PepperSec, a company that operates the company. The judges said the trio not only made the code public, but also profited financially by obfuscating illicit funds through the tools they built.
Specifically, the judges ruled that Pertsev was personally responsible for laundering well over $1 billion worth of stolen ETH by North Korean hackers known as the Lazarus Group. was lowered. Even if Pertsev was unable to prevent this from happening after the software was released, the fact that Pertsev helped release the software that made this possible in the first place without taking any steps to prevent it. was considered sufficient reason to convict him.
“Tornado Cash operates in the manner in which Defendants and their co-founders developed Tornado Cash,” the judge wrote. “So the operation is completely their responsibility.”
tornado cache
Tornado Cash is a smart contract on the Ethereum blockchain. A user can send her ETH to his Tornado Cash smart contract, which allows her to withdraw the same amount of her ETH from the same contract. Since there is no way to link his ETH in and out of Tornado Cash, the smart contract acts as a privacy tool, allowing the user to obfuscate his trading history.
In addition to the Tornado Cash smart contract itself, PepperSec helped develop tools, specifically the graphical user interface (GUI), that allow users to easily access the smart contract. This part of the mixing infrastructure relied on a separate smart contract. This facilitated the payment of withdrawal fees through special entities called “intermediaries” and managed through DAOs (Decentralized Autonomous Organizations) and associated TORN tokens.
According to the judges, the DAO did not bring about meaningful change. In reality, PepperSec was still responsible for the operation of his GUI and the functionality of the relayer system.
The Tornado Cash smart contract itself now operates completely independently of PepperSec, and in fact still does. Pertsev or PepperSec never actually “touched” the ETH passing through the Tornado Cash smart contract. That is, they never kept the funds. They simply built software that Ethereum users utilize to mix their ETH with other users, and they could not stop this from happening.
Previously, it was generally assumed that this would exempt developers from anti-money laundering laws, but this assumption has been reversed today.
more relevant
This ruling could have far-reaching implications for open source software development in general, including Bitcoin software development, at least in the Netherlands.
For Bitcoin, the two most popular mixing services are operated by companies: Wasabi Wallet and Samourai Wallet. While PepperSec claimed that its operations are technically decentralized through his DAO, Wasabi Wallet and Samourai Wallet operate more directly and offer centralized coordination through dedicated servers. Ta. Just as PepperSec could be responsible for how users use Tornado Cash, logically he could be responsible for Wasabi Wallet and Samourai Wallet as well.
Accordingly, Samurai Wallet founders and developers Keonne Rodriguez and William “TDevD” Hill were recently indicted by the U.S. Department of Justice on charges of money laundering and operating an unauthorized money transmitter. Although these arrests were made at the direction of the U.S. Department of Justice (DOJ), today’s ruling in the Netherlands may provide a glimpse of what is to come in the United States. Immediately after Samurai Wallet’s arrest, Wasabi Wallet announced that it would cease operating its mixing service later this month.
Additionally, based on today’s ruling, developers who develop privacy tools without a central coordinator could still be held liable in the Netherlands if their tools are used for illegal purposes. Money laundering.
Meanwhile, Mr Pertsev’s Peppersec colleagues Mr Storm and Mr Seminov were also indicted in the US last year, with the former (who lives in the US) awaiting trial in September.
Mr Pertsev has the option of appealing the verdict. If he does, he will have to wait for this appeal from prison since he was taken into custody immediately after sentencing.
You can read the full judgment (in Dutch) here.
