Is This The Reason Dutch Authorities Arrested The Alleged Tornado Cash Developer?

Is This The Reason Dutch Authorities Arrested The Alleged Tornado Cash Developer?

The plot thickens. Could it be that the supposed Tornado Cash developer arrested in the Netherlands has ties to a Russian security agency? Is a job in 2017 for a company with tenuous connections to Russia enough to warrant arrest? As Bitcoinist told you It is reiterated, there had to be another reason for the FIOD and OFAC to arrest a simple Tornado Cash encoder. It’s this one? We still don’t have official confirmation, but it could be.

Apparently, the alleged developer of Tornado Cash was Aleksey Pertsev, CEO of PepperSec and residing in the Netherlands. The information about his alleged ties to Russian intelligence comes courtesy of Kharon. The company “provides data and analytical tools to optimize key functions of financial crime compliance programs, including KYC, screening and investigations.”

How are PepperSec and Tornado Cash related?

Their report states that Tornado Cash “runs on software code developed by PepperSec, Inc.” What and where is this company exactly?

“PepperSec is a Delaware registered company with principal offices in Seattle, Washington, according to a 2020 SEC filing. PepperSec’s website describes the company as a white hat hacker security consulting firm.”

At the moment, the website in question contains an “About us” it says:

“We are professional security engineers with many years of hands-on experience and deep knowledge of technologies. We are ready to do battle to make your project as safe as possible.”

Fair enough, but…

How is PepperSec connected to Russia?

Apparently, Kharon has reviewed “personal and company profiles” and determined that Aleksey is the CEO of PepperSec. So far so good. Where’s the smoking gun? Back to Kharon’s report:

“In 2017, Pertsev was an information security expert and smart contract developer for Digital Security OOO, according to an archived version of the company’s website reviewed by Kharon. Digital Security OOO is a Russian entity appointed by the US Department of the Treasury in 2018 for providing material and technological support to the FSB, Russia’s main security agency. The Treasury alleged that, starting in 2015, Digital Security worked on a project that would increase the offensive cyber capabilities of Russia’s intelligence services.”

This is tenuous, to say the least. And in no way related to Tornado Cash. However, one caveat is that the other two “PepperSec founders – Roman Storm, based in the United States, and Roman Semenov, based in Russia” were not touched. Until here. Therefore, the case can only be against Aleksey Pertsev.

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How does all this relate to Tornado Cash?

In this part, we will resort to quotes from Bitcoin’s Notorious Enemy “Fortune.” O magazine interviewed Nick Grothaus, vice president of research at Kharon, who said:

“You had this guy working for [Digital Security OOO] and doing penetration testing, and then the Treasury assigned the company to help the FSB’s hacking capabilities.”

Okay, we didn’t know about the “pen-testing” part. However, how does this relate to Tornado Cash? To answer that question, the magazine turns to Alex Zerden, “an adjunct senior fellow at the Center for a New American Security,” who said:

“This opens up a lot of credibility issues for the developers of Tornado Cash. This is pretty in-depth information that informs why the US government and Dutch authorities took certain actions.”

This, however? “There seems to be a more complex and complicated picture that takes longer to unravel,” added Zerden. And we agree. That’s why the EFF called for clarity around the Tornado Cash situation. As Bitcoinista already said, “maybe OFAC has a better case and the developer is guilty of something else. If that were the case, with “clarifying information and reducing ambiguity” OFAC would have avoided this entire situation.”

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Tornado Cash, a tornado over a city

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