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Alexey Pertsev's Bail Plea Rejected, Prison Term Continues

The judges said there is a significant possibility of Pertsev evading capture or interfering with the ongoing investigations should he be granted bail.

Photo by Valery Tenevoy / Unsplash

Alexey Pertsev, a leading Tornado Cash developer, was arrested in August of last year after the United States deemed illegal the cryptocurrency mixer. A panel of judges from the East Brabant Court in the Netherlands has decided that Alexey Pertsev will remain in custody until his next hearing, which is scheduled to take place in April.

Per a story (1) by Coindesk, the judges concluded there is a significant possibility of Pertsev evading capture or interfering with the ongoing investigations should he be granted bail.

On the other hand, the Russian creators have refuted the allegations by stating that Tornado Cash is built on open-source software accessible to anyone with internet access.

Despite this, the Office of Foreign Assets Control (OFAC) under the United States Treasury Department asserted that Tornado Cash has greatly assisted hackers located in North Korea in laundering stolen digital assets.

In addition, the Dutch prosecutor's office Martine Boerlage made allegations that rather than merely providing the source code for Tornado Cash, Pertsev and his colleagues operated it as a business and unquestioningly accepted kickbacks.

Keith Cheng, who represents Pertsev, asserts that the Dutch court needs a solid understanding of the decentralized nature of blockchain technology or the part that his client played in the incident.

"We were given a chance to explain the rationale behind Tornado Cash and why it does not constitute money laundering. From our point of view, the man's lack of education puts him behind bars. The news that Pertsev won't be allowed out on bond disappoints me."

Cheng observed,

"He would battle until the very end to illustrate the necessity of decentralized choices, programs, and open-source code."

It violates the law in the Netherlands to hide or conceal the origin of funds or the transfer of those funds. The prosecution contends that roughly 75 percent of all cryptocurrency associated with criminal activity was placed on the Ethereum blockchain via Tornado Cash.

A Closer Look at the Activities Involved with Tornado Cash

Even though the United States has imposed sanctions, the Tornado Cash protocol, which can be found on multiple chains, including Ethereum, has implemented several improvements recently.

Typically, a user will generate a random key (note) and then deposit Ether or an ERC20, in addition to sending a hash of the note to the Tornado Cash smart contract. This process takes place in the background. Users must wait before withdrawing to protect their anonymity after making a deposit.

A user of Tornado Cash must provide evidence that they have a valid key to one of the notes deposited before the contract would transfer either the ERC20 to a recipient of their choosing. This is done to make the withdrawal process easier.

The technology has been around for quite some time, and the chief executive officer of Coinbase Global Inc, Brian Armstrong, stated that the United States Treasury Department made a mistake when it sanctioned the technology rather than filtering out the dishonest participants.

Tornado Cash has received more than 3,488,660 Ether deposits from 39,395 users.