A 29-year-old man was arrested in Amsterdam on Wednesday on suspicion of concealing criminal money flows and facilitating money laundering via the so-called mixing service Tornado Cash. Such an online service, for example, mixes bitcoin from multiple crypto funds in order to disguise its origin.
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The man is the developer of Tornado Cash. “Users of a mixing service often do this to increase their anonymity,” reports the Dutch Fiscal Intelligence and Investigation Service (FIOD).
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It is suspected that through Tornado Cash, criminal money flows have been concealed on a large scale in this way, which originate, among other things, from (online) thefts of cryptocurrencies. “This includes funds stolen in hacks by a group believed to be related to North Korea.”
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The mixing service went online in 2019 and is said to have generated at least $7 billion in revenue since then. “Research found that at least $1 billion worth of cryptocurrencies of criminal origin went through the mixer. It is suspected that people behind this organization have made a large profit from these transactions,” says the FIOD.
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Mixed up
Virtual coins are popular with criminals because they are difficult to trace. A mixing service like Tornado Cash makes that even more difficult, because virtual money is cut into smaller pieces. These pieces are taken apart, transferred and shuffled together. Via detours, the virtual money is returned to the owner and its origin can hardly be traced.
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Tornado Cash developer will be arraigned Friday. The investigation is led by the Functional Public Prosecutor’s Office. Earlier this week, the US government imposed sanctions on Tornado Cash for allegedly laundering money from cybercriminals.
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