Court Extends Tornado Cash Developer Pertsev’s Pre-Trial Detention, Raising Legal Concerns for Privacy Protocol Developers

Alexey Pertsev, the developer behind the cryptocurrency mixing protocol Tornado Cash, will remain in pre-trial detention as he awaits his trial, raising significant legal concerns for developers of privacy-preserving technologies. Pertsev shared the news on November 21 via a post on X, expressing his disappointment and frustration:

“I am sad to announce that, despite our best efforts, the court decided to prolong my pre-trial detention. This decision significantly complicates my ability to prepare for the appeal, but I remain determined to continue fighting for justice.”

The decision comes amidst increasing regulatory scrutiny of Tornado Cash, a privacy-focused service that allows users to obfuscate their cryptocurrency transactions. On November 14, several Democratic members of the U.S. House of Representatives called on Treasury officials to address the continued operation of Tornado Cash, which was sanctioned in 2022 but is still functional. They pointed out that the use of the mixer has surged, with Tornado Cash processing $1.8 billion in deposits during the first half of 2024, a 45% increase over the entirety of 2023.

The Crackdown on Tornado Cash and Its Implications for Privacy

Pertsev remains in detention facing charges of money laundering, despite operating Tornado Cash as a non-custodial protocol. The funds processed through Tornado Cash are never held or controlled by the service, yet Pertsev was convicted by the Dutch court of facilitating the laundering of $1.2 billion in illicit funds.

In May 2023, Pertsev was sentenced to five years and four months in prison after Dutch judges found him guilty of money laundering through the platform. This ruling followed his arrest in August 2022, shortly after Tornado Cash was blacklisted by the U.S. government.

During his trial, Pertsev argued that he should not be held responsible for the actions of individuals who used Tornado Cash for illegal activities. However, the court rejected this defense, stating that if Pertsev and his co-founders truly intended to prevent criminal misuse of the protocol, they would have taken additional steps to ensure security.

Implications for Developers of Privacy Technologies

Pertsev’s ongoing legal battle has raised broader concerns for developers of privacy-preserving technologies, especially those in the cryptocurrency space. Legal experts, including Matthew Niemerg, co-founder and president of AlephZero, emphasize that offering privacy features in compliance with the law will be crucial for the future of privacy protocols.

The case highlights the growing tension between privacy innovation and government regulation, with implications for the development of decentralized and privacy-focused technologies in the future.