Appeal and Immediate Custody

CoinDesk reported that Alexey Pertsev, the developer behind Tornado Cash, has taken a significant step by appealing in a Dutch court and challenging his recent conviction for money laundering.

Following Tuesday's verdict, the court handed Pertsev a 64-month prison sentence and immediately ordered him to be taken into custody. The appeal process is expected to take several months, though it remains to be seen if the appeal has been granted.

Tornado Cash Under Scrutiny

The court's verdict stated, "Tornado Cash does not pose any barrier for people with criminal assets who want to launder them."

This assessment formed the basis of the court's decision to find Pertsev guilty of money laundering activities. Tornado Cash came under intense scrutiny when the U.S. government blocked it in August 2022.

The U.S. Treasury accused the service of being a critical tool for the North Korean hacking group Lazarus, which is linked to significant crypto thefts, including the $625 million hack of Axie Infinity's network.

'To'nado Cash does not pose any barrier for people with criminal assets who want to launder them,' according to a rough translation of the verdict.

Legal Troubles for Other Developers

Roman Storm and Roman Semenov, also involved in developing Tornado Cash, face similar allegations of money laundering and sanctions violations in the United States.

Storm will stand trial in September, while Semenov remains at large. Storm was arrested last year after Tornado Cash was again added to the U.S. sanctions watchlist.

In late March, Storm filed a motion to dismiss all charges against him, claiming he did not operate a money laundering business. However, the U.S. Department of Justice rejected this motion.

Legislative Response

In response to these developments, Democratic representatives have introduced the U.S. Blockchain Integrity Act.

This proposed legislation aims to disrupt the flow of illicit funds and promote transparency by prohibiting financial institutions, cryptocurrency exchanges, and registered money service businesses from accepting funds processed through a mixer.

Failure to comply could result in civil penalties of up to $100,000. This legislative push is part of a broader crackdown by the U.S. government on crypto-mixing services.

Recent Convictions and Sanctions

The crackdown has seen other significant convictions, including the founder of Bitcoin Fog, a $400 million crypto-mixing service. Roman Sterling was found guilty of money laundering, money laundering conspiracy, operating an unlicensed money-transmitting business, and violations of D.C.

Money Transmitters Act. The U.S. Treasury has also added Tornado Cash to its Specially Designated Nationals list, effectively banning Americans from using the mixer.