Dutch courts have convicted Alexey Pertsev for laundering $1.2 billion through the crypto mixer Tornado Cash.

This significant ruling highlights the challenges in regulating decentralized finance (DeFi) and cryptocurrencies.

Dutch Court Convicts Tornado Cash Founder

On Tuesday, a Dutch court convicted Pertsev of money laundering with Tornado Cash, a tool that unknown transaction histories on the Ethereum blockchain, often for illegal activities. As a result, the court handed Pertsev a 64-month prison sentence.

Prosecutors argued that Pertsev failed to implement sufficient safeguards to prevent criminals from exploiting Tornado Cash. They highlighted its use by the North Korean hacker group Lazarus, which they say stole $625 million from the Ronin Network in March 2022.

Defending Pertsev, his lawyers maintained that Tornado Cash’s smart contracts are decentralized and operate autonomously. Also, they contended that it is unfair to hold Pertsev responsible for anonymous users’ actions since the platform functions without centralized oversight.

“The war is not over. Privacy is a human right,” Pablito, Head of Security Research in Blockfence, said. 

This verdict could set a precedent for similar cases globally. Besides, the sentencing might redefine regulations for DeFi platforms that offer anonymity services.

Implications for DeFi Regulation

While Pertsev faces legal issues in the Netherlands, his associate, Roman Storm, confronts similar charges in the United States. Authorities have accused Storm of money laundering and violating US sanctions, with his trial set for September 23.

Read more: Tornado Cash: Everything You Need To Know

Additionally, the US Department of Justice (DOJ) has recently challenged Storm’s bid to drop the charges, raising alarms within the cryptocurrency community. On April 26, the DOJ detailed why Storm must address his alleged involvement in Tornado Cash’s criminal activities.

The DOJ accuses Storm and co-founder Roman Semenov of planning money laundering. He operated it without a license and violated sanctions. They believe these serious charges warrant a jury’s evaluation.

Storm’s legal team argues that Tornado Cash is a privacy tool and should not be held accountable for its misuse. They reject any claims of laundering over $1 billion or collaborating with North Korean cybercriminals, pointing to a lack of evidence.