Alexey Pertsev: Tornado Cash’s Dev to Remain Behind Bars, Bail and Internet Access Denied
What sentence could Alexey Pertsev get, since, according to expert this case is more relevant for DeFi than any other? | Credit: Hameem Sarwar, CCN.com/X
Key Takeaways
- Alexey Pertsev would remain in jail despite requests for bail and computer access to prepare his appeal.
- This raised concerns about his ability to defend himself fairly.
- Roman Storm’s trial was postponed due to the complex case and the vast amount of evidence, including translated documents, requiring review.
- Pertsev should serve more than five years in prison on money laundering charges.
- Pertsev’s trial could set a precedent for the treatment of privacy tech developers, and experts fear a crackdown if they are convicted.
In May, a Dutch judge at the s-Hertogenbosch court convicted Tornado Cash developer Alexey Pertsev of money laundering and sentenced him to 64 months in prison.
The charges stem from activities between July 9, 2019, and August 10, 2022, where Pertsev was found to have facilitated money laundering operations through the Tornado Cash platform, having reasonable suspicion of the transactions’ criminal origins.
On July 12, the same court denied bail for Pertsev as he prepared for his defense.
Dev Denied Bail and Tech Access in Landmark Crypto Case: “Right to Fair Trial Violated?”
The Dutch Court of Appeal in ‘s-Hertogenbosch has decided to keep Alexey Pertsev in custody, denying him bail as he awaits his appeal.
Despite his requests, the court has denied Pertsev access to computers or the internet. His lawyers argued that Pertser needed internet access to prepare his defense adequately. Despite this, the court ruled that his continued detention would not impede his ability to prepare a defense.
In an interview , his lawyer, Keith Cheng, expressed concern that the court’s decision to continue Alexey Pertsev’s detention overlooks the impact on his ability to prepare his defense. Judith de Boer, co-counsel, pointed out that access to the internet is crucial for Pertsev, given the complex legal questions at the heart of his case. She argued that for a software developer accused of criminal liability due to third-party misuse of his software, being able to research and gather relevant information online is essential.
This case could set significant precedents regarding developers’ responsibilities and rights, potentially affecting the broader legal landscape. De Boer emphasized that pre-trial detention, especially without internet access, is particularly problematic in such a legally groundbreaking case.
During a hearing, Cheng highlighted the necessity of computer access for Pertsev, detailing 18 critical points where digital tools were essential for preparing his appeal.
Despite these arguments, requests for Pertsev’s release from detention and a separate request for digital facilities at the prison were unexpectedly denied due to safety policies.
The ruling was a major setback since Pertsev, an expert in DeFi technology, plays a crucial role in explaining the technicalities of smart contracts and protocol governance to his defense team, who understandably aren’t as professed. Cheng has argued that denying Pertsev the tools needed for his defense violates his right to a fair trial under the European Convention on Human Rights.
Trial Delay Approved for Tornado Cash Co-Founder Roman Storm
Meanwhile, in a recent court hearing in lower Manhattan, Judge Katherine Polk Failla approved a request to delay the trial of Tornado Cash co-founder Roman Storm.
The decision came despite opposition from prosecutors. Storm’s defense team had sought the delay, citing the complexity of the case and the extensive amount of evidence to review, which includes millions of pages of documents, many in Russian requiring translation.
This evidence, provided on a rolling basis by the government, presents novel legal and factual challenges that necessitate more preparation time, according to Storm’s attorneys.
Pertsev Convicted of Money Laundering to 64 Months in Prison
A court in ‘s-Hertogenbosch, Netherlands, heard Pertsev’s case a two-day trial in March this year. The panel’s verdict was expected to influence the way how developers are treated by courts across the world.
Tornado Cash developer Alexey Pertsev has been convicted of money laundering by a Dutch judge at the s-Hertogenbosch court on Tuesday.
Pertsev was sentenced to 64 months in prison by the court. An indictment shared ahead of the trial alleged that between July 9, 2019, and August 10, 2022, Pertsev consistently engaged in money laundering and should have reasonably suspected the criminal origins of transactions on the Tornado Cash platform.
Tornado Cash Developer Laundered $1.2 Billion.
Pertsev laundered $1.2 billion through Tornado Cash, the court heard. An indictment says he took part in money laundering between July 9 2019 to August 10 2022. His August 2022 arrest in the Netherlands came not long after the US Treasury put Tornado Cash on a blacklist.
The US Treasury says Tornado Cash has significantly helped the Lazarus Group, a North Korean hacking entity responsible for the $625 million hack of the Ronin Network, among other criminal activities.
Fellow Tornado Cash developers Roman Storm and Roman Semenov are also facing charges of money laundering and violating sanctions in the US. Storm’s trial should take place in September, while American authorities are yet to catch Semenov.
Guilty Verdict for Pertsev Could Spark Global Crackdown on Blockchain Privacy Tech,
If Pertsev receives a guilty verdict from a three-judge panel, industry experts warn that it could prompt global authorities to intensify their crackdown on developers of blockchain-based privacy platforms. Such a decision could emit a “dangerous signal,” not only to developers of privacy tools but also to those responsible for platforms using them. On the other hand, an acquittal for Pertsev would likely provide a collective sense of relief within the developer community.
Top crypto lawyer David Lesperance told CCN that Alexey Pertsev’s case breaks ground in two significant ways.
“First, is creating a money laundering tool (i.e. Mixer) the same as actually money laundering? This is analogous to whether it is a crime to create a tool which among its uses would be safe cracking is equal under the law to actually safe cracking? The second major issue arises if the judges decide that the creation of a tool that could be used for safe cracking tool is equal to the criminal act of safe cracking. They will then need to decide whether someone who participated in the open source creation of that tool has sufficient “ownership” of its resulting creation to be criminally liable?”
An acquittal could imply that legal bodies, especially in Europe, are establishing a sanctuary for developers working on privacy tools for blockchain projects, even if those tools are later exploited by criminal elements. This prospect has spurred crypto privacy advocates to rally behind Pertsev.
For instance, Crypto Canal, a group based in Amsterdam, called for the 36 protocols in the indictment to publicly state that they do not hold Tornado Cash developers accountable for laundered funds. Some protocols responded affirmatively.
If found guilty, Pertsev could face up to an eight-year prison sentence, although prosecutors say he should get five years and four months.
Pertsev Faces Court, Disputes Charges in Emotional Plea
After 19 months of investigation and intense debates over the nature of open source code, the trial of Alexey Pertsev reached its climax in March 2024 in a Dutch courtroom with two days of testimony and a heartfelt final plea from Pertsev as he faced the possibility of conviction and imprisonment.
In his closing remarks, Pertsev expressed his bewilderment , saying: “I cannot comprehend two things.
“The fact that I am responsible for the abuse of Tornado Cash by someone else.
“The second thing is prison time as punishment of any amount.
“I don’t see how it will help me, or anyone else, or victims.”
Public prosecutor Martine Boerlage argued that Pertsev, a Russian-born software expert, should serve 64 months in prison for helping launder $1.2 billion through the decentralized cryptocurrency mixer.
Pertsev, however, maintained his innocence, emphasizing his role as merely a programmer without any criminal intent. He told the court: “I never had the desire to help or tolerate criminals in any way, I have a different mindset.
“I hope you understand that.”
Pertsev’s supporters claim that his jailing could instigate a “chilling effect”. This, they says, could put developers off engaging in ventures that could see them caught up in law enforcement investigations.
Keith Cheng, Pertsev’s defense attorney, said that Tornado Cash serves as a privacy tool for the Ethereum blockchain. Cheng explained that transactions on the blockchain were immutable. Therefore, he added, anyone’s transaction history was publicly accessible.
Pertsev Released to House Arrest Ahead of May Verdict
In April 2023, Pertsev was released from jail but remained under house arrest until his trial. During this period, Pertsev was under electronic surveillance and had to wear an ankle monitor. In November, Dutch authorities refused to release Pertsev, deeming him a flight risk. They also suggested that he might have hidden assets that had not yet been frozen.
The crypto community and privacy advocates welcomed the news of Pertsev’s bailing. One user commented , “Still sickening that the dude had to sit in jail for months to finally go ‘free.’ Writing code and ideas shouldn’t be punishable.”
CULT DAO contributed $25,000 towards funding Pertsev’s legal defense. Prosecutors argued Pertsev could potentially start a new privacy mixer and should therefore remain detained, according to Bitcoin developer Sjors Provoost.
Controversial Code-Related Arrest
Alexey Pertsev was arrested in August 2022 in Amsterdam following US Treasury sanctions against the cryptocurrency mixer he helped develop. This arrest was for writing code for the mixer, which authorities allege helped money laundering .
Pertsev has garnered support from significant figures within the digital asset industry, including American whistleblower Edward Snowden . Snowden criticized the arrest as “deeply illiberal and profoundly authoritarian.”
While Pertsev’s defenders argue that his role was not directly linked to any criminal activity, Dutch prosecutors dispute that. They said he was like a bank cashier who processes transactions without regard to the origin of the funds. They also argued that Pertsev and other co-founders were fully aware that their operational decisions helped criminal activity. Prosecutors also presented text messages between Tornado Cash’s founders that discussed ways to bypass anti-money laundering checks.
Pertsev Denied Bail, Dutch Court Cites Flight Risk
In November 2022, a Netherlands court has ruled that Pertsev would remain in jail until at least February 20, declaring him a flight risk.
During a hearing, Dutch public prosecutor Martine Boerlage formally charged Pertsev with money laundering. She argued that Pertsev’s role in developing Tornado Cash directly facilitated the laundering of illicit funds. Despite claims that Tornado Cash was a decentralized protocol beyond Pertsev’s control, Boerlage contended that it operated similarly to PepperSec, a company where Pertsev worked with fellow developers Semenov and Storm.
Outside the court, Pertsev’s attorney, Keith Cheng, expressed disappointment with the ruling, criticizing the judges’ understanding of the technology involved. He stressed the importance of distinguishing Tornado Cash from other crypto mixers, which are typically associated with criminal activities.
Boerlage also dismissed defense arguments about the software’s autonomy, asserting that Pertsev and his colleagues could influence the protocol’s operations.
Tornado Cash Co-founder Roman Storm Asks Court to Dismiss Money Laundering Charges
