Tornado Cash Founders Face Money Laundering Charges: How Much Privacy is Too Much?

Roman Storm and Roman Semenov are charged for their alleged involvement in laundering over $1 billion because of the software they created.

Tornado Cash, a cryptocurrency mixer platform known for its privacy features, is, again, in the limelight for all the wrong reasons. The Southern District of New York unveiled an indictment against its founders, Roman Storm and Roman Semenov, centering on the platform’s alleged role in laundering over $1 billion:

Alexey Pertsev, another Tornado Cash developer, was arrested on August 10, 2022 in the Netherlands over alleged “involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralised Ethereum mixing service Tornado Cash.”

He was kept in a Dutch prison while money laundering charges were waiting to be filed. On April 20, 2023, he was released on house arrest awaiting trial.

Let’s consider the duality of technology. Platforms like Tornado Cash offer private and necessary features in the crypto space. But the flip side is that their potential misuse cannot be ignored. So, where does responsibility lie?

While it’s easy to point fingers at creators and label them as enablers of bad actors such as the Lazarus Group, we must discern between creation and misuse. Most inventors can’t predict every twist and turn their inventions might take in the real world. Yet, pioneering technological advancements undoubtedly carries an inherent responsibility to foresee and address potential pitfalls.

By actively discussing new tech between developers, industry leaders, policymakers and the broader public, the industry can strike a balance between progress and values.

Moreover, integrating ethics right from the developmental phase is a practical necessity. If tech professionals collaborate with lawmakers during the development phase, many post-launch concerns can be addressed proactively.

This especially rings true when lawmakers are not following the own laws that they create.

Peter Van Valkenburgh pointed out in his recent oped with Coin Center that under FinCEN law, crypto mixers do not simply become a money transmitter based on who uses it, as “these activities are merely the communication and publication of software and data:”

Will the industry be able find a balance that allows them to develop adequate privacy tools that satisfy lawmakers, or will it lead to every privacy-focused developer getting arrested?