A 29-year-old man was arrested in Amsterdam on Wednesday on suspicion of concealing criminal money flows and facilitating money laundering through the so-called mixing service Tornado Cash. Such an online service, for example, mixes bitcoins from several crypto funds in order to hide its origin.
The guy is the developer of Tornado Cash. “Users of the mixing service often do this to increase their anonymity,” the Dutch Financial Intelligence and Investigative Service (FIOD) reports.
It is suspected that through Tornado Cash, large-scale criminal fund flows have been hidden in this way, which arise, among other things, from (online) thefts of cryptocurrency. “This includes money stolen in hacks by a group believed to be linked to North Korea.”
The online mixing service entered 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 crypto-currencies of criminal origin passed through the mixer. It is suspected that the people behind this organization made significant profits from these transactions,” says FIOD.
Virtual currencies are popular with criminals because they are hard to track. A shuffling service like Tornado Cash makes this even more difficult, because virtual money is shredded into smaller pieces. These pieces are disassembled, transported, and mixed together. Through bypass methods, virtual money is returned to the owner and its source cannot be traced.
The developer of Tornado Cash will be called on Friday. The investigation is led by a career prosecutor’s office. Earlier this week, the US government imposed sanctions on Tornado Cash for allegedly laundering money from cybercriminals.
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