Alexey Pertsev: Does 64 Month Prison Sentence for Tornado Cash Developer Reflect Tougher European Money Laundering Stance?
Pertsev received close to the maximum sentence for money laundering. Photo by engin akyurt on Unsplash.
Key Takeaways
- Alexey Pertsev has been sentenced to 64 months in prison for money laundering.
- The Tornado Cash developer received close to the maximum sentence possible.
- Pertsev’s punishment reflects the EU’s increasingly hardline stance on anonymous crypto.
A Dutch court has found Tornado Cash developer Alexey Pertsev guilty of money laundering and sentenced him to 64 months in prison. The sentence is just shy of the maximum six years he could have received. This was despite the fact that he never personally touched any proceeds of crime.
Following the EU’s latest anti-money laundering regulation, the sentence reflects how European authorities are taking an increasingly hard line on anonymous crypto.
Anonymous Crypto Now Tantamount to Money Laundering
Regulators and law enforcement have never been especially welcoming of platforms that enable anonymous transactions. However, their approach has become more prohibitive in recent years.
Increasingly onerous Know-Your-Customer (KYC) requirements already threaten to drive a whole host of crypto asset activity away from Europe. And while the EU hasn’t exactly banned privacy coins, there is almost no way for businesses to handle them in a compliant way without recording the sender and receiver of each transaction, which misses the whole point.
Whether it’s privacy coins, cryptocurrency mixers or no-KYC exchanges, the message is clear. European authorities now conflate anonymous crypto with its illicit uses.
Somewhat paradoxically, the current paradigm is at odds with European values. In other areas, the EU promotes some of the strongest privacy rights in the world.
Private vs. Anonymous
Although advocates of anonymity argue it is necessary to preserve financial privacy, EU regulation distinguishes between private and anonymous transactions.
The General Data Protection Regulation (GDPR) imposes restrictions on how firms handle transaction data. This ensures that law enforcement, or anyone else, can’t snoop into individuals’ financial affairs without a warrant.
However, banks and crypto firms must still collect information about who sends what to whom, ensuring it is available if a crime is suspected.
The legal argument for Pertsev’s indictment rests on the fact that Tornado Cash enabled anonymous transactions. Prosecutors therefore argued that he is liable for money laundering that happened through the platform.
Why Privacy Tech Developers Stay Hidden
Echoing the case of Ross Ulbricht, Pertsev’s sentence implies developers can be implicated in the crimes of their software’s users.
Given this tendency, one has to wonder whether Satoshi Nakamoto and Monero inventor Nicholas Van Saberhagen would also have been arrested if they hadn’t chosen to hide behind pseudonyms. Given the trend of blaming builders for crimes committed with their inventions, is there any wonder the practice remains commonplace?
Had Pertsev and his collaborators chosen to cloak themselves in digital identities, they would likely be free today. But they didn’t. Instead, they mistakenly presumed that doing everything out in the open would help legitimize Tornado Cash.
That battle has now been lost and it appears there is a message for similar developers: it is safer to remain in the shadows.
