Dutch regulators appear to be tightening their grip on individuals involved in the recently sanctioned cryptocurrency mixer. TornadoCash. The Tax Information and Investigation Service (FIOD) has announced that it arrested a 29-year-old promoter in Amsterdam on Wednesday. This person is suspected of having participated in money laundering through Tornado Cash.
The FIOD has increased vigilance on advanced technologies that facilitate money laundering. The suspect was brought before the investigating judge.
The investigation against the male suspect is led by the Prosecution of serious fraud, crimes against the environment and confiscation of assets. The authorities have not ruled out multiple arrests after the event.
In the press release it is stated,
«On Wednesday, August 10, the FIOD arrested a 29-year-old man in Amsterdam. He is suspected of being involved in concealing criminal financial flows and facilitating money laundering by mixing cryptocurrencies through the Ethereum Tornado Cash decentralized mixing service.«
Tornado Cash under scrutiny
According to the official statement, the Financial Advanced Cyber Team (FACT) of the agency launched a criminal investigation against TornadoCash in June this year. The FACT has now claimed that the mixer may have been used to conceal large-scale criminal money flows, including cryptocurrency thefts and scams. This includes the theft of 455 million dollars by the infamous North Korean hackers, Lazarus Group.
According to FACT, TornadoCash it has since generated a turnover of billions of dollars and investigations have found that a significant portion of these funds is of criminal origin and goes through the mixer.
Bans and subsequent responses
The move comes days after the US Office of Foreign Assets Control (OFAC). imposed a blanket ban on Tornado on August 8, prohibiting people in the country from participating in the open source protocol.
Soon after, web3 platforms like Alchemy and Infura blocked access to Ethereum-based cryptocurrency mixing service. Github removed Tornado contributor accounts immediately after the privacy tool was included in the release. Treasury sanctions list. The stablecoin issuer Circledirected by Jeremy Allaire, also froze USDC funds that were in the smart contracts of Tornado Cash.
In today’s impromptu presentation on the Tornado Cash sanctions, @valkenburgh lays out the case that this is an unconstitutional restriction on freedom of speech.
“We are looking right at the chilling effect”
You can watch the whole thing here: https://t.co/nGFpVN3DRu pic.twitter.com/gFUSLTFLr1
— Neeraj K. Agrawal (@NeerajKA) August 9, 2022
However, many experts, including the Allairebelieve that the measure sets a bad precedent and is likely to have broad implications in the digital asset space. The decision to remove the privacy software has sparked widespread protest from multiple industry leaders.
The Treasury, for its part, justified the measure by citing several cases in which Tornado Cash had been used for the money laundering.
