A 29-year-old man has been arrested by Dutch police in connection to the Tornado Cash cryptocurrency mixing service suspected of “involvement in concealing financial flows” and “facilitating money laundering.”
The Dutch Fiscal Information and Investigation Service, or FIOD, described the man as a “developer” in a statement published today after his apprehension in Amsterdam on Wednesday. Authorities added that further arrests are “not ruled out.”
Tornado Cash is a decentralized mixing service that allows users to deposit crypto tokens to anonymize the origin of the funds. Although it can be used for legitimate purposes to provide privacy for transactions, it has also been used as a tool for anonymizing the proceeds from large-scale hacks and heists.
In June, the Financial Advanced Cyber Team of FOID opened a criminal investigation against Tornado Cash and alleges that the service has been “used to conceal large-scale criminal money flows, including from (online) thefts of cryptocurrencies (so-called crypto hacks and scams).”
“It is suspected that persons behind this organization have made large-scale profits from these transactions,” authorities said in the statement.
FACT estimated Tornado Cash has received turnovers exceeding $7 billion in proceeds from such criminal enterprises since its start in 2019. That estimate is similar to the amount the United States Treasury accused Tornado Cash of laundering when it sanctioned the mixing service on Monday.
Investigations by the U.S. Treasury revealed that Tornado Cash had been used to launder money after numerous large-scale crypto heists. They included more than $96 million stolen from Harmony’s Horizon Bridge and at least $7.8 million taken from the recent Nomad Bridge heist. Investigators also believed that the Lazarus Group, a North Korean state-sponsored hacking group linked to the $615 million hack of the popular crypto game “Axie Infinite,” laundered more than $455 million through the service.
Tornado Cash is not the only mixing service to be sanctioned by the U.S. Blender.io was also targeted in May.
After the U.S. sanctions, multiple services terminated accounts related to Tornado Cash, including code repository GitHub, blockchain API companies Alchemy and Infura and crypto payments company Circle. Th-se moves have made it more difficult for users to interact with the service but not impossible.
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