Netherlands crime agency FIOD stated today that it has detained a “suspected developer” of Tornado Cash, the Ethereum-centric mixing service sanctioned last week by the U.S. Treasury.
“On August 10, the FIOD apprehended a male of 29 years old in Amsterdam. He is accused of hiding unlawful financial flows and promoting money laundering via the mixing of cryptocurrencies using the decentralized Ethereum mixing tool Tornado Cash, according to an agency statement.
“Today, the suspect is taken before the examining court,” FIOD said, adding that “additional arrests cannot be excluded out.”
The Financial Advanced Cyber Team (FACT), which is part of the agency, initiated a criminal investigation against Tornado Cash in June 2022, according to FIOD.
“FACT thinks that via Tornado Cash, large-scale illegal money flows, including (online) cryptocurrency thefts, have been concealed” (so-called crypto hacks and scams). This includes monies obtained through hacking by an organization alleged to have ties to North Korea, according to the statement.
Tornado Cash, which was released in 2019, is a privacy tool that aims to obscure the origin of Ethereum transactions by combining a large number of transactions and mixing them to prevent them from being traced on the public blockchain.
However, the anonymity provided by Tornado Cash has long attracted the attention of authorities, many of whom are worried that the application is being used for money laundering and other illegal activities.
When the U.S. Treasury Department put Tornado Cash and a number of addresses affiliated with the service on its list of Specially Designated Nationals on Monday, it essentially prohibited Americans from using the tool and doing business with the listed locations.
The Treasury defended the action by noting multiple instances in which Tornado Cash was used for money laundering by groups such as the Lazarus Group, a hacker group supported by the North Korean government.
Since then, the Tornado Cash website has been unreachable, and the project’s final tweet, in which it posted a list of organizations and projects that have complied with the restriction, was published on Tuesday.
Circle, GitHub, which pulled Tornado Cash’s source code from its platform, Alchemy, Infura, and the decentralized exchange dYdX, which started banning addresses related to the service, are among them.
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