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Landmark Conviction of Tornado Cash Developer Sparks Debate Over Software Liability in Crypto Industry

The conviction of Alexey Pertsev, a developer of the coin-mixing protocol Tornado Cash, highlights a chilling interpretation of criminal liability with far-reaching implications for the crypto world.

Pertsev has been sentenced by a Dutch court to five years and four months for money laundering via Tornado Cash, despite not directly engaging in the laundering activities.

Andrew Balthazor, a litigator with Holland and Knight, explained the implications of the verdict to Cointelegraph.

He stated, “Mr. Pertsev’s conviction reinforces the views of several governments that software developers who make their software available to the public will be held liable for the foreseeable consequences of the public’s use of that software.”

Balthazor elaborated that under this theory of liability, developers cannot claim ignorance of specific criminal acts or point to the software’s limitations in preventing misuse.

He emphasized that it is the developer’s responsibility to create mechanisms to reduce or prevent foreseeable criminal use of their software.

When asked if this view included the U.S., Balthazor confirmed that it did, as shown by the Department of Justice’s indictments against Tornado Cash.

This interpretation contrasts sharply with traditional views of liability.

Natalia Latka, director of public policy and regulatory affairs at Merkle Science, noted how the perception of developers has evolved.

Historically, developers were seen as neutral creators, responsible for the functionality of their tools but not their misuse.

However, this perspective has shifted, especially with decentralized networks challenging traditional regulations.

Latka stated that developers must now consider the legal implications and potential misuse of their creations.

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The crypto community quickly recognized the significance of Pertsev’s trial.

Eléonore Blanc, founder of CryptoCanal, discussed the trial’s implications on social media, suggesting that “Tornado Cash” could easily be replaced with any cryptocurrency.

She expressed concern that the court systematically disregarded the defense’s arguments, potentially setting a precedent for broader applications in the crypto industry.

Blanc further personalized the ruling, stating, “As crypto builders, we are all Alexey. We keep fighting for him, his legacy and the cypherpunk values.”

The ruling poses risks to privacy, immutability, and decentralization.

Balthazor argued that immutable smart contracts could become highly risky for developers, suggesting that publicly available programs might need to be amendable to comply with law enforcement or regulatory requirements.

Natalia Latka emphasized that “compliance by design” will become crucial for developers, integrating regulatory compliance from the outset.

Courts will scrutinize whether developers knowingly created tools for illegal purposes or were negligent, with intent or negligence significantly impacting legal outcomes.

Ultimately, if developers must sacrifice privacy, immutability, and decentralization for compliance, the core values of blockchain technology could be fundamentally compromised.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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