The crypto industry is reeling in horror at the latest judicial injustice. Alexey Pertsev, a mere developer for Tornado Cash, is now staring down a five-year and four-month prison sentence. His crime? Writing code. Meanwhile, Binance founder Changpeng Zhao (CZ), who openly admitted to turning Binance into a money-laundering haven for cybercriminals and terrorists, received a laughable four-month sentence.
The glaring disparity in these rulings exposes a disturbing bias in how justice is meted out in the crypto world. If the draconian standards used against Pertsev in Amsterdam had been applied to CZ, the Binance founder would be rotting in jail for at least a decade. Instead, CZ‘s cooperation with U.S. authorities earned him a slap on the wrist. This is a man who pled guilty to money laundering on a massive scale, dwarfing anything Tornado Cash was ever involved in. Yet, Pertsev, whose only role was developing open-source software, is the one who will rot in prison.
His previous eight-month detention will be deducted from Persev’s sentence, leaving him four and a half years to serve for creating a tool that can be used anonymously.
This verdict is a chilling precedent for the future of privacy in decentralized finance (DeFi). Experts warn it will stifle the development of open-source software that provides financial privacy tools. Pertsev’s trial was less about his actions and more about setting an example. Prosecutors argued he didn’t do enough to prevent criminals from using Tornado Cash, while the defense highlighted the open-source and autonomous nature of the smart contracts at its core. But the judges dismissed these arguments, emphasizing that Pertsev’s ideological stance did not exempt him from legal responsibility.
Tornado Cash is a decentralized protocol designed to obfuscate transaction histories on the Ethereum blockchain. However, the Dutch court, led by Judge Henrieke Slaar, condemned it as a tool for criminals. Pertsev’s lawyers have 14 days to appeal, but the damage to the landscape of crypto privacy is already done.
This ruling is poised to reshape DeFi regulation, fostering a “chilling effect” on innovation. Pertsev and his co-developers argued they were solving an inherent privacy problem on a publicly visible and immutable blockchain. Despite these defenses, prosecutors and judges focused on the misuse of the technology by criminals and sanctioned entities, such as North Korea’s Lazarus Group, which laundered over $7 billion through Tornado Cash.
The hypocrisy is glaring. While Pertsev faces the full brunt of the law for his technical contributions, major players like CZ receive leniency for far greater crimes due to their cooperation with authorities. The crypto community has rallied behind Pertsev, but his case highlights a broader issue: the selective application of justice based on cooperation and influence rather than the severity of the crime.
The ramifications of this verdict extend beyond Pertsev, potentially signaling similar fates for other Tornado Cash individuals like Roman Storm and Roman Roman Semenov, who face similar charges in the U.S. The question remains: is the legal system equipped to judge the innovations and complexities of blockchain technology fairly, or will it continue to protect the powerful while punishing the innovators?
