The Fiscal Information and Investigation Services (FIOD), the Netherlands government agency responsible for financial crimes, arrested the suspected developer of the cryptocurrency service Tornado Cash. This comes just days after the U.S. Office of Foreign Assets Control (OFAC) sanctioned the software and any wallets associated with it.
“He is suspected of involvement in concealing criminal financial flows and facilitating money laundering”, said the FIOD on August 12th.
Tornado Cash, like many decentralized applications, was operated by a DAO. This meant there was no one in charge or directly profiting, members would vote for decision-making processes. The dApp, and its developer, are suspected of facilitating transactions for North Korea and many known hacks recently.
Attempting to charge a developer, for how their code or software is used by others, is a dangerous tactic that could infringe on innovation within the country. This specific developer, created a line of code on the blockchain that allowed people to stay anonymous despite public ledgers. Anonymous options are something that will be required, as the future moves towards the digital space.
This case is similar to a previous case in the United States, the Ross Ulbricht take down. In 2013, the U.S. arrested Ross and shut down his website, SIlk Road. The young man, passionate about decentralization and free markets, operated the notorious website for two years.
Over that time drugs, weapons and even people were sold over the site, gaining the authorities attentions for obvious reasons. The founder of the site was arrested and convicted, but not found guilty of doing any of these things himself. He was found guilty of facilitating illegal transactions, among other things, and as a first time, non-violent offender, got charged with two lifetime sentences plus forty years with no parole.
Tornado Cash is more of a money laundering issue, and with the advanced knowledge and acceptance in decentralized technologies in 2022, hopefully, can avoid the same fate as Silk Road. Countries known for leading innovation over the past half century, should not be discouraging decentralized innovation while the blockchain space is growing.
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