A Tornado Cash developer has been arrested in Amsterdam for his involvement with the project. This is based on a report from the Netherland’s Fiscal Information and Investigation Service that says they have arrested a 29 year old man for involvement with ‘concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies’ related to the service.
Tornado Cash is an automated program that runs on the Ethereum blockchain. This allows users to send ether or ERC-20 tokens to one address and withdraw to another one without connection to the first. The user is expected to allow funds to wait for some time in the shielded address. This shields their privacy as no one can know for sure who withdrew what assets from the service.
This kind of thing has been around for a while. What makes Tornado Cash a special circumstance is that it wasn’t ran by a company or person. Instead it was ran by smart contracts on the Ethereum blockchain. There wasn’t even a single developer that could deploy updates to the program. Instead it relied on a token known as TORN to handle governance issues like that.
Today’s arrest is sure to escalate the battle with privacy advocates. The Treasury took the unheard of action of sanctioning the decentralized privacy tool just days ago for the first time. Now that authorities are actually arresting devs we’ve moved into a new stage of escalation. This is sure to escalate further as authorities haven’t ruled out additional arrests.