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The court decision raises alarming legal concerns for the developers of privacy-preserving blockchain protocols.
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Alexey Pertsev’s pre-trial detention has been prolonged in another worrying sign for open-source code developers, particularly of privacy-preserving technologies.
Pertsev, the developer of the cryptocurrency mixing protocol Tornado Cash, will remain in detention as he awaits his trial, he announced in a Nov. 21 X post:
“I am sad to announce that, despite our best efforts, the court decided to prolong my pre-trial detention. This decision significantly complicates my ability to prepare for the appeal, but I remain determined to continue fighting for justice.”
Pre-trial detention is prolonged. Source: Alexey Pertsev
The decision follows growing regulatory interest around Pertsev’s cryptocurrency mixing protocol.
On Nov. 14, several Democratic Party members of the United States House of Representatives demanded answers from Treasury officials on what is being done about the crypto-mixing service Tornado Cash, which was sanctioned in 2022 but remains operational.
The lawmakers highlighted a “resurgence” in mixer usage this year, with Tornado Cash accepting $1.8 billion in deposits in the first half of 2024, a 45% increase compared to all of 2023.
Related: Tornado Cash developer Alexey Pertsev denied bail while preparing appeal
The crackdown on Tornado Cash, and why it matters for privacy
Pertsev remains under arrest due to money laundering-related charges, despite operating a non-custodial cryptocurrency mixing protocol.
Pertsev was found guilty of money laundering by Dutch judges at the s-Hertogenbosch Court of Appeal on May 14. The developer was sentenced to five years and four months in prison for allegedly laundering $1.2 billion worth of illicit assets on the platform.
As a noncustodial crypto mixing protocol, the funds that go through Tornado Cash are never held or controlled by it.
Despite having no control over the funds, the developer was found guilty after first being jailed in the Netherlands in August 2022, shortly after Tornado Cash was blacklisted by the US government.
During his March trial, Pertsev argued that he could not be held liable for the actions of those who used the Tornado Cash protocol for nefarious or illegal purposes.
The court rejected this argument, saying that if Pertsev and the other co-founders of Tornado Cash had truly wanted to prevent criminals from abusing the protocol, they would have taken further measures to ensure security.
Related: Crypto mixing is ‘not a crime,’ says CryptoQuant CEO
Pertsev’s legal battle raises significant worries for the developers of privacy-preserving technologies.
Offering privacy-preserving features in a legally compliant manner will be essential for future privacy protocols, according to Matthew Niemerg, co-founder and president of AlephZero.
Matthew Niemerg speaking to Cointelegraph. Source: Cointelegraph
Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers
This article first appeared at Cointelegraph.com News
