While Its Founders Fight For Freedom, Criminals Keep Using Tornado Cash For Hiding

With one founder at large, one in jail, and another awaiting trial, Tornado Cash remains the go-to crypto mixer for cybercriminals to hide their tracks.

Alexey Pertsev, Roman Semenov, and Roman Storm launched Tornado Cash together in 2019.

The blockchain privacy protocol anonymizes blockchain transactions by obfuscating the trail between the source wallet and destination addresses. The tool was an immediate success amongst privacy enthusiasts and crypto criminals looking to hide their tracks.

In 2022, the FBI connected Tornado Cash to a $600 million crypto heist by North Korea's Lazarus hacking group. The protocol was sanctioned, and its founders prosecuted.

Pertsev was arrested in August 2022 and charged with money laundering in the Netherlands. In May, he was found guilty and sentenced to 5 years and four months in prison. Pertsev's defence is working to appeal the court's decision. They tried to seek bail for the co-founder on the grounds that the legal team needed his help to understand the technicalities of the process, but last Friday, the request was denied.

Semenov and Storm were both charged in the U.S. in August 2023 for conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business, and conspiracy to violate the International Emergency Economic Powers Act.

Storm was arrested, but Semenov is still at large.

Last week, Judge Katherine Polk Failla accepted Storm's lawyers' request to delay his trial, initially scheduled for September, to December. The magistrate echoed concerns about the charge code when she compared charging Tornado Cash founders to charging WhatsApp creators for the crimes their users commit while using it.

While the software developers are fighting for their freedom, the crypto-mixer remains the go-to tool for criminals to hide their tracks.

As one of the few fully decentralized crypto mixers - the founders officially made the protocol permissionless when they destroyed their admin keys in May 2020 - Tornado Cash's code can't be stopped or shut down.

In March, blockchain analytics firm Elliptic detected that dormant funds on an account were being sent to Tornado Cash. The money is believed to have been stolen on a $112.5 million heist to the crypto exchange HTX last November by none other than the North Korean state-sponsored Lazarus Group.

More recently, on July 16th, the Li.Fi protocol was exploited for $11 million, and, according to MistTrack, its hackers used the 2019 crypto-mixer to launder funds.

Two days before, on Sunday, DeFi lending protocol Minterest was hacked for $1.4 million. The attacker's address was funded via Tornado Cash, and the stolen funds were sent to it once the exploit was completed.

Last Friday, one the same day Storm court audience took place, DeFi protocol Dough Finance was hit with a flash loan. An investigation by Peckshield found that the hackers used the U.S.-sanctioned protocol to launder the stolen crypto.

In the Netherlands, Pertsev is serving time because of the $1.2 billion laundered from July 2019 until his arrest in August 2022 via the crypto mixer he created. In the U.S., Storm is trying to defend himself against similar charges. Nevertheless, all around the world, Tornado Cash is still a popular crypto-mixing tool, especially among criminals.

For better or for worse - once deployed, smart contracts cannot be destroyed.