'Dangerous' precedent: crypto execs slam arrest of suspected Tornado Cash developer

Quick Take

  • Crypto execs said the arrest of a suspected Tornado Cash developer was a threat in a free society and may have “huge consequences” for the industry.

Crypto industry executives reacted with alarm at the arrest of a developer suspected of involvement in Tornado Cash.  

The Dutch Fiscal Information and Investigation Service (FIOD) arrested an unidentified 29-year-old man in Amsterdam, it said on Friday, alleging that he was involved in concealing criminal financial flows and facilitating money laundering through Tornado Cash, a crypto mixing service that allows users to obscure blockchain-based transactions. 

Ryan Sean Adams, founder of Mythos Capital and Bankless, was among the first to condemn the arrest. He tweeted about two hours after it was made public that the suspect may have written “code that served as a public good for people to maintain their privacy online."

“They put a man in jail because bad people used his open source code,” Adams wrote. “This cannot stand in any free society.” 

The arrest was also seen as an assault on privacy by Cinneamhain Ventures partner Adam Cochran. “Code is free speech. Unless there is more to this story, then arresting someone for making a privacy tool that was misused is an insane government overreach,” Cochran tweeted. 

Robin Andre Nordnes, an analyst at Outlier Ventures, tweeted via his handle @degenroot that the arrest was a “dangerous" precedent and a pivotal moment in the crypto industry that might have “huge consequences.”

Aave founder Stani Kulechov echoed Nordnes, tweeting that an arrest for writing privacy-preserving code was out of line: “This arrest makes all privacy/encryption developers a target," he said, adding that “people use privacy tools on a daily basis online.”

Yearn core developer Banteg likened the arrest to detaining the founders of a firearms manufacturing company for facilitating a public shooting, or a pressure-cooker company founder for terrorism. 

The arrest took place on Wednesday, just two days after the US Treasury added Tornado Cash and 44 associated Ethereum and USDC wallets to its Specially Designated Nationals list. The Treasury accused the crypto mixer of laundering more than $455 million for North Korea's Lazarus Group amid Tornado Cash's association with high-profile hacks including Ronin and Harmony. The sanction was believed to be the first by a US regulator against a DeFi operator. 

Ryan Selkis, co-founder and CEO of crypto research firm Messari, slammed the Treasury decision. He wrote on Twitter that the US government's crypto policies “reward scammers and bad actors,” while punishing innovators. 


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