By Elizabeth Hearst for AMLi
Police in the Netherlands have arrested a 29-year-old man in Amsterdam as the “suspected developer” of US-sanctioned crypto mixing service, Tornado Cash.
In a statement, the Fiscal Information and Investigation Service (FIOD) said the man arrested was suspected of involvement in “concealing criminal financial flows” and “facilitating money laundering” through the mixing of cryptocurrencies through Tornado Cash.
The man is due to be brought before a judge later today, while the FIOD have warned that multiple arrests have not been ruled out.
The FIOD has also said that advanced technologies such as Tornado Cash mixers that “may facilitate money laundering” are receiving “extra attention” from the body.
Online crypto mixers “make it possible to conceal the origin or destination of cryptocurrencies”, while the potential criminal origin of the crypto is “often not or hardly checked”, according to the FIOD.
In June 2022, the Financial Advanced Cyber Team (FACT) of the FIOD launched a criminal investigation against Tornado Cash, following suspicions that the platform had been used to conceal “large-scale criminal money flows” including from crypto hacks and scams.
FACT estimates that since its inception in 2019, Tornado Cash has achieved a turnover of at least $7BN (€6.85M), with investigations conducted showing at least $1BN (€970M) of funds being illicit in origin.
Earlier this week, the US Treasury Department’s Office of Foreign Assets Control (OFAC) announced it would sanction the virtual currency mixer Tornado Cash.
Tornado Cash operates on the Ethereum blockchain, and “indiscriminately” facilitates “anonymous transactions by obfuscating their origin, destination and counterparties with no attempt to determine their origin”, said OFAC in a statement.
Despite its purpose to “increase privacy”, OFAC said that mixers such as Tornado are “commonly used” by illicit actors to launder dirty money.