Tornado Cash was placed on the U.S. sanctions list by the Office of Foreign Assets Control (OFAC) on August 8. Two days later, Alexey Pertsev, a coder associated with a cryptocurrency mixing service, was arrested by Dutch authorities.
The blacklist and subsequent events sparked an outcry from privacy supporters, many protesting and participating in acts of civil disobedience.
But according to the intelligence firm Kharon, Pertsev was employed by a company linked to the Russian Federal Security Service (FSB).
“The individual identified by various media reports as the developer of Tornado Cash is a former employee of a Russian company that was banned for providing support to the Russian Federation,” the report said. FSB, Kharon found.”
Tornado Cash link to the Russian Security Service
The Kharon report confirms that Tornado Cash was developed by a Delaware-registered company called PepperSec, of which Pertsev is its founder and CEO. According to reports, Dutch resident Pertsev works as an information security expert and smart contract developer at Digital Security OOO.
According to a June 11, 2018 press release, Digital Security happens to be a Russian entity flagged by the U.S. Treasury Department for providing material and technical support to the FSB.
The Treasury Department also claimed that, as of 2015, Digital Security was involved in a project that would increase the offensive cyber capabilities of Russian intelligence.
Bail refused
The unprecedented move by the Treasury Department has drawn some backlash, with many stating their position to legally challenge that decision. While platforms such as Circle and dYdX have taken steps to align with the sanctions, opponents have highlighted inconsistencies with the sanctions themselves. The Johns Hopkins researchers argue that OFAC’s mandate is ambiguous.
Pertsev has not been formally charged with a crime. However, his bail request was denied. A Dutch judge recently ruled that the coder must spend 90 days in jail pending trial. An online petition seeking Pertsev’s release has also gained traction. It currently has over 2,700 signers.
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