The Dutch government agency responsible for investigating financial crimes said it has arrested an individual suspected of being a developer of the US-sanctioned crypto mixing service Tornado Cash in a move that has rattled some crypto and privacy advocates.
The Fiscal Information and Investigation Service said Friday that the Arrested 29-year-old man is suspected of being involved in “concealing criminal financial flows and facilitating money laundering” through the popular crypto mixing service.
“Multiple arrests are not ruled out,” it said. The agency added that it arrested the individual in Amsterdam.
The move comes days after the US government sanctioned Tornado Cash — a service that allows users to mask their transactions by jumbling funds from different sources before sending them to the Ultimate destination — for its role in enabling billions of dollars’ worth of cryptocurrency to be laundered through its platform.
Tornado Cash has been used to launder more than $7 billion worth of virtual currency since it was created in 2019, the US Treasury said. The platform was also used to launder funds Stolen in the $600 million Ronin Bridge breach and a $100 million compromise of Harmony Bridge earlier this year, according to security firms.
At least $1.5 billion in proceeds of crime such as ransomware, hacks and fraud have been laundered through Tornado Cash to date, analytics platform Elliptic told TechCrunch earlier this week.
Proponents of crypto and privacy have criticized the Dutch agency’s move, arguing that mainstream payments Rails have been used for far more laundering.
The Dutch agency’s action further illustrates the growing interest of authorities worldwide in so-called crypto mixers. The Office of Foreign Asset Control earlier this year sanctioned Blender, another crypto mixing service.
The Dutch agency’s Financial Advanced Cyber Team “suspects that through Tornado Cash has been used to conceal large-scale criminal money flows, including from (online) thefts of cryptocurrencies (so-called crypto hacks and scams). These included funds stolen through hacks by a group believed to be associated with North Korea. Tornado Cash started in 2019 and according to FACT it has since achieved a turnover of at least seven billion dollars,” it said in the statement.
In the aftermath of the US sanction, a number of firms, including GitHub, Circle, Alchemy and Infura, have suspended or terminated accounts linked to Tornado Cash.
Tornado Cash’s token TORN tumbled to $13.7 from $16.5 on the news, widening its decline this month. The token has fallen more than 50% in the last seven days, according to CoinMarketCap.