Today, The FIOD (Fiscale inlichtingen- en opsporingsdienst) arrested a 29-year-old man located in Amsterdam. On suspicion of involvement in concealing criminal financial flows and facilitating money laundering by mixing cryptocurrencies through the mixing service Tornado Cash.
What is Tornado Cash?
Tornado Cash is a mixing service for cryptocurrencies that makes it possible to conceal the origin or destination of cryptocurrencies. People who use this mixing service do this to increase their anonymity and privacy on the blockchain.
But also bad actors can make use of this open-source code. Cyber-criminals, who want to wipe out their trails when handling funds acquired from criminal activity. According to investigators at least one billion dollars’ worth of cryptocurrencies of criminal origin passed through Tornado Cash, who makes profits from these questionable transactions.
Are you in trouble if you ever used Tornado Cash?
If you ever received money from Tornado Cash, which is now a sanctioned entity. Your account could be tainted. This could be a problem for any US citizen. But after seeing the arrest of a suspected dev, it could be a concern of every TC user in the ‘fourteen eyes’ countries, including The Netherlands and Belgium.
What most likely will occur is that regulators will investigate large transactions according to models used to identify ‘real’ bad actors. It will be a logistical nightmare for investigators, that’s for sure. But you have to realize that receiving ETH through Tornado Cash shouldn’t be enough to risk prosecution.
What happened to Tornado Cash?
After the US sanctions, deposits have slowed down and a big surge in withdrawals was noted. When we look at the official site, the site is shutdown. Meaning regulations for DeFi are becoming very real. Some speculate that this is the beginning of the end of the decentralized finance component of crypto.
But many users wouldn’t be surprised to see a few dozen brand new mixers created in non-US jurisdictions with the code forked from Tornado Cash. But what could be problematic is attracting the liquidity that is needed to mix cryptocurrency funds.
After the delisting the price of Tornado Cash own token TORN, sold-off earlier this week when the US sanctions happened.