Suspected Tornado Cash developer arrested in Amsterdam

Dutch authorities arrested a developer suspected of involvement in Tornado Cash on Wednesday, two days after the US government sanctioned the crypto mixing service, according to a statement today from the Dutch Fiscal Information and Investigation Service (FIOD). 

The FIOD arrested an unidentified 29-year-old man in Amsterdam, according to the statement. He is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing service Tornado Cash, which allows users to obscure blockchain-based transactions. A spokesperson for FIOD declined to comment on the suspect’s identity when contacted by The Block. 

“These advanced technologies, such as decentralised organisations that may facilitate money laundering are receiving extra attention from the FIOD,” the agency said, adding that it may make further arrests. 

The agency also claimed that the people behind the organization — not specifying if that’s the developers who coded it or members of the DAO that runs it — made large-scale profits from these transactions.

The US Treasury added Tornado Cash and 44 associated Ethereum and USDC wallets to its Specially Designated Nationals list, according to an August 8 announcement from the Treasury’s Office of Foreign Asset Control. The wallets identified included the smart contract that runs Tornado Cash and the Tornado Cash donation wallet.

Following the sanctions, deposits to the protocol have drastically slowed down and there has been a big surge in withdrawals. Around 15% of assets held by the protocol have already been withdrawn.

The sanctions have also impacted the protocol’s users. Circle has frozen $75,000 of USDC that was sitting in the addresses, crypto infrastructure services have started limiting access to the protocol and the decentralized exchange dYdX has started blocking accounts tied to it. 

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Updates to add comment from FIOD in second paragraph. 

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