Tornado Cash was sanctioned by the US Treasury Department in 2022 over allegations it obscured funds stolen by North Korean state hackers. Pertsev was arrested days later, dealing a major blow to the embryonic crypto privacy sector.
The Dutch court particularly noted that the platform was designed for criminals, and that its developers should have done more to prevent bad actors from laundering money.
Bitcoin Magazine has quite a hyperbolic take on the result, implying that all financial privacy tools are criminalized
Update: appeals court finds that OFAC overstepped their authority because some smart contracts cannot be owned or controlled and are therefore not property!
This has major implications for the kind of decentralized blockchain software Intercoin has built. It means there is now a precedent that makes it easier for people around the world to be able to use these smart contracts, to peacefully self-organize and transact online, even across national boundaries.
This still doesn’t mean the participants themselves can escape scrutiny, especially if they are large organizations or entities that control a lot of capital. But this precedent lessens the chilling effect on developers of privacy-preserving smart contracts. Intercoin’s smart contracts have never been built to conceal the sources of funds or assist in money laundering — on the contrary, they were designed to increase transparency and trust among participants, allowing international group activities and transactions to take place between regular people online — and this might be a new direction for a world where OFAC is interested in controlling foreign assets.
Having said that, the developer of Tornado Cash is still incarcerated in their home country (which doesn’t protect free speech like USA does), are they not? Will this be reversed too after the appeal court’s decision? The developer filed an appeal.