On Wednesday 10 August, the FIOD arrested a 29-year-old man in Amsterdam. He is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralised Ethereum mixing service Tornado Cash. Multiple arrests are not ruled out. These advanced technologies, such as decentralised organisations that may facilitate money laundering are receiving extra attention from the FIOD. Also in the cryptocurrency domain, the FIOD stands for a safe financial Netherlands and investigates with effect and impact. Today the suspect is brought before the examining judge.
Tornado Cash is a mixing service for cryptocurrencies. The online service makes it possible to conceal the origin or destination of cryptocurrencies. The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Users of a mixing service mostly do this to increase their anonymity.
In June 2022 the het Financial Advanced Cyber Team (FACT) of the FIOD started an criminal investigation against Tornado Cash, that is offered on the Internet by means of a decentralised autonomous organisation (DAO). A DAO is an organisation that does not have a hierarchical decision-making process, for example by a board. Instead, decisions are made on the basis of members’ votes. The decisions are recorded in a programming code in a so-called ‘smart contract’. The operation of the DAO also takes place using these smart contracts.
FACT suspects that through Tornado Cash has been used to conceal large-scale criminal money flows, including from (online) thefts of cryptocurrencies (so-called crypto hacks and scams). These included funds stolen through hacks by a group believed to be associated with North Korea. Tornado Cash started in 2019 and according to FACT it has since achieved a turnover of at least seven billion dollars. Investigations showed that at least one billion dollars’ worth of cryptocurrencies of criminal origin passed through the mixer. It is suspected that persons behind this organisation have made large-scale profits from these transactions.
Since Monday 8 August 2022 Tornado Cash has been placed by the US government on the OFAC sanctions list of America.
The investigation is led by the Public Prosecutor’s Office for serious fraud, environmental crime and asset confiscation.