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Crypto Mixers: As Tornado Cash Developer Alexey Pertsev Jailed, Do They Have Any Purpose Other Than Money Laundering? 

Last Updated May 15, 2024 2:14 PM
Shraddha Sharma
Last Updated May 15, 2024 2:14 PM

Key Takeaways

  • The debate on crypto mixers highlights the tension between maintaining privacy and preventing illicit activities.
  • The Blockchain Integrity Act proposes a temporary ban on crypto mixers to study their impact.
  • Despite concerns, proponents argue that crypto mixers offer essential privacy for user security.

The recent sentencing of Tornado Cash developer Alexey Pertsev has reignited the debate on the legality and purpose of crypto mixers. While some view these tools as essential for maintaining privacy in digital transactions, others see them as enablers of illicit activities.

The discussion has intensified with the introduction of the Blockchain Integrity Act in the US Congress, aiming to impose a temporary ban on cryptocurrency mixers to curb their misuse.

Prison Sentence of Tornado Cash Developer

Tornado Cash developer Alexey Pertsev has been sentenced to 64 months in prison for money laundering, with the possibility of an appeal.

Attorney Carly E. Howard said it is sad for privacy and human rights. She called the court’s TornadoCash reasoning “baffling, chilling, and a dangerous precedent.” According to Howard, this standard could criminalize the creation of nearly any tool if someone else uses it for wrongdoing.

Previously, authorities arrested Samourai Wallet CEO Keonne Rodriguez and CTO William Hill. They are charged with processing more than $2b in illegal funds and facilitating the laundering of over $100m from dark web markets. It was alleged that the funds went through a crypto mixer used by criminals.

Proponents argue that crypto mixers offer privacy for legitimate transactions, allowing users to keep their spending habits or donation recipients anonymous. They also suggest that mixers can enhance security by obscuring the origin of funds, making them harder to trace by hackers or bad actors. 

Notably, crypto mixers are not inherently illegal in most jurisdictions.

US Can Potentially Make Mixers Illegal

In the US, Congressman Sean Casten has introduced the Blockchain Integrity Act, co-sponsored by Reps Brad Sherman, Bill Foster, and Emanuel Cleaver. 

The framework was introduced in the US House of Representatives and will ban cryptocurrency mixers for two years. As a result, no registered virtual asset service provider (VASP) will be able to use the service. 

Congressman Sean Casten stated that  digital asset mixers enable illicit actors to move large sums of money globally for criminal purposes without being detected

The Congressman said, “Cryptocurrency has been used to finance terrorist attacks around the world. Half North Korea’s nuclear program is funded through cryptocurrency theft made possible by mixers.”

He advocated for a temporary ban on mixers to study their use in illegal activities, prevent future crypto-funded terrorism, and guide future policymaking.

The US has sanctioned Tornado Cash-like mixers, including Sinbad and YoMix. Privacy protocols are under increased scrutiny, with Railgun, an EVM protocol, gaining attention after a transaction by Ethereum co-founder Vitalik Buterin.

Buterin said:Privacy is normal,” and explained that Railgun’s privacy pool enhances security by making it harder for malicious actors to compromise user privacy.

Complex Relationship of Privacy and Security

The controversy surrounding crypto mixers is a complex balance between privacy and security. The cases of Tornado Cash and Samourai Wallet highlight the potential for abuse, prompting legislative efforts to regulate these tools. But the action potentially impacts an entire sector.

However, the need for privacy in legitimate transactions remains a concern, as emphasized by figures like Vitalik Buterin. Moving forward, policymakers face the challenge of navigating these challenges to ensure both privacy rights and security measures are adequately addressed while capping illegal use. 

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