The First Crypto Developer to be Arrested and What it Means forDevelopers

We have a developer tied to the sanctioned crypto application tornado cash who has just been arrested in the Netherlands. Okay and this is a big deal because a lot of people out there wondering like hey you know what does this mean for other blockchain developers people who are creating crypto applications you could use, you just get arrested for putting code out there on the blockchain. The actual reason why he was arrest have not be dully communicate only romours that the developer is Likely to be involve some money laundering crime.

Tornado Cash is a privacy solution that’s built on top of the Ethereum platform that was just sanctioned within the past week or so by the US Treasury. What does that mean? So basically, Tornado cash is a privacy solution for the Ethereum blockchain like other EVM? Compatible chains. So basically, you know whenever you’re doing transactions on a blockchain, you have a crypto wallet address, and you’re sending cryptocurrency from one account to another, you know, you can see all the activity associated with it on the blockchain network scan like Etherscan. Any particular account, is like of course your username on the Blockchain, it is like your address and you know, most people won’t necessarily know that’s you All right, it is like a pseudonym on some way, but everything that’s attached to its identity, whether people know it’s you are not,  all that information is public. And, of course, there’s lots of ways people can who are very sophisticated can potentially linked your identity. Your personal identity back to you, while address which are given buy exchange will require you to do KYC first by submitting Identity document in order to buy cryptocurrency that will be store on your wallet Like they’re probably going to know it was you anyways. That’s where the Privacy solution for Tornado cash comes into play, which basically makes that problem ease to solve.

So what is the technology behind that, it’s a technology called a mixer. They are actually lots of people sending cryptocurrency to the same place, and then Withdrawing from one address either with the same address or probably not but with a brand new address, you should get an address where you can withdraw your cryptocurrency from the application. And it’s really hard to link your withdrawing address to your depositing address because so many different people were depositing.

 Now there are some sophisticated people out there who can get a pretty good guess as to the withdrawing addresses which are relative to the depositing addresses, we’re talking about you know blockchain and sophisticated things like that, but anyways, that’s what the application is for. Now within the past week, or so, we saw it sanctioned by the US Treasury and since then, we’ve seen a lot of crazy things happen, right? Like, ever since the sanctions happened, you know, we started to see USDC the stable coin, getting blacklist from addresses. We also we saw the Tornado cash GitHub page like the place where they stored the open source of the source code for the application just wiped out. We also seen those who contributed to Tornado cash development have their profiles completely deleted. We’ve seen the Discord for Tornado Cash community and governance gone instantly. Just like you see them one second and then gone the next. And so now, one of the latest things are seeing in this is that a developer who’s expect to be tornado cash developers arrested in the Netherlands. Okay, so let’s jump into this.

So an Identify 29 year old developer who suspected of being involved in the sanction Tornado Cash protocol was arrested on Friday according to a press release by the Fiscal Information and Investigation Service. They begin investigation in Tornado Cash snice June the said that the haven’t ruled out on making multiple arrests in the case. So, Dutch prosecutors are investigating matter on suspicion of money laundering and asset confiscation. They said that the suspect will stay for 14 days in custody after being seen by examining judge. They’re giving extra attention to decentralize autonomous organizations that may facilitate money laundering

According to several users, Twitter and Discord channel of the Tornado Cash has gone offline, website is not balancing snice August 8^th. So there is one report that I've seen recently floating around that was essentially saying that the developer was arrested in in on the charges of also assisting money laundering and other illicit activity. We don’t the the actually reason for the arrest where was it because he was the actual developer for Tornado Cash or was it because he was part of the team that wrote part of the code for the tornado cash or some other reason you know that wasn’t actually sort of known yet like an additional act here where there was direct contribution to. Other are assisting other people who were knowingly you know laundering money. Okay. So that’s where we don’t have the details yet. We don’t exactly know the true reason for this arrest Just yet

We know of course why tornados cash was sanctioned by the US Treasury, we got one of the big justifications, it is because it’s a service that’s been used by multiple hacking groups that have been behind some of the biggest crypto hacks since the beginning of the year. You can see that funds were taken and hacks and then sent directly to the application. Now, you can’t always see where they were going.

Due to this, people have started asking some moral questions like because you created something that can be useful, you know, and then people choose to misuse it. Does that mean that the thing itself should be banned? Of course, that’s kind of the direction that it looks like the action here Is implying. Now the next question is, you as a developer can you now to be held responsible just for either creating or contributing to something like this. I want to kind of bring this back to developers who are those people that aregoing to read this feeling and think that the could be thrown in jail for putting code out there.

It’s a natural question you know, that’s going to jump people’s minds with this. So the short answer is,  it depends, one of those short answer is probably not. All right, I know it’s not even very comforting answer but let me break that down even further. Like first of all, use common sense. Okay? At this point, if we know that a mixer is being sanctioned by the US Treasury, like Tornado cash and put it on the blacklist, don’t just go and fork it and put it on the testnet or anything that will be damn wrong and your understand it is. The other thing is, we’ve always kind of had a certain things that blockchain developers are capable of doing that are off-limits to lots of people,  Like for example, most likely, if you were to, create your own cryptocurrency and actually put it out there in the mainnet and like start trading it hope you know that you’re probably in violation of security law, like it’s not just completely safe for developer to create their own cryptocurrencies and put them out there. Start trading them, there’s always been the risk of that. There’s always been things you can don’t as developer legal or without legal backing. The probably are going to be looked upon unfavorably and could get you in trouble long-term. Now that being said, there’s lots of things that are not are clearly okay to do. Another thing is, you know, there’s a difference also, special say you’re working a blockchain job. Please be careful.

I’m no legal expert but some of the rules that I play by many cases and yeah there’s always going to be a difference. So the reason I bring this up is if there’s a question in your mind, let’s say you work at a blockchain job for a company you can go ahead and do your job in as much as you are in check with existing rule and regulations.

 We see on twitter the found of DYDX Antonio tweeting about this say it is a stand against freedom of speech and also the Tornado Cash team are not shady according to him and we can see that their contracts are decentralized and there is no back door in it in his verdict this is an illegal act  which we all understand if not all maufacturers should be held reposnsible for the misuse of their product same with other centralize institution.

There is still a whole lots of grey area in this sanction but we will see have the story develop and what will be the justification of the arrest where is before of writing the code and any other things.

But then this is a war on code, and blockchain.