The Good Tech Companies - Cypherpunks Write Code: Pertsev, Semenov, Storm, and Tornado Cash

Episode Date: August 4, 2024

This story was originally published on HackerNoon at: https://hackernoon.com/cypherpunks-write-code-pertsev-semenov-storm-and-tornado-cash. Tornado Cash founders, Alexey Pertsev, Roman Semenov, and Roman Storm can be considered cypherpunks for his privacy fight. Let's learn more about them. Check more stories related to tech-stories at: https://hackernoon.com/c/tech-stories. You can also check exclusive content about #tornado-cash, #crypto-mixing, #cypherpunk-rebellion, #cypherpunks-and-blockchain, #alexey-pertsev, #obyte, #online-privacy, #good-company, and more. This story was written by: @obyte. Learn more about this writer by checking @obyte's about page, and for more stories, please visit hackernoon.com. Alexey Pertsev, Roman Semenov, and Roman Storm are the founders of Tornado Cash. It’s a privacy tool on Ethereum that helps users keep their transactions mostly anonymous. When you send Ether-based tokens through Tornado Cash, it mixes your coins with those of other users, making it difficult for anyone to trace where your money came from or where it's going.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. Cypherpunks write code, Pertsiv, Simionov, Storm, and Tornado Cache, by Obite. Commonly, we only consider the members of a famous mailing list initiated by Tim A, John Gilmore, and Eric Hughes in 1992 as, Cypherpunks. Satoshi Nakamoto was around, too, and that's partly why the mailing list became famous later. But cypher punks are much more than people who just happen to be there. They're skilled coders and privacy activists dedicated to creating new digital tools to foster online freedom and social change. Sometimes, sadly, they even pay a high price for it. That was the case with Julian

Assange, and that's also the case now with the Tornado Cash founders, Alexey Pertsev, Roman Semyonov, and Roman Storm. Unlike Assange, they weren't there for the mailing list in the 90s, they were far too young, but they can be conside red cypher punks for their considerable contribution to online privacy. Also, as with many other cypher punks, we don't know a lot about them beyond Tornado Cash and its legal intricacies. We know some things, though. All of the mare of Russian origin and their ages range between 31, Pertsev, and 35, Semyonov. Pertsev was based in the Netherlands, and his co-founders were in the United States. The latter is also the country in which they

registered Peppersack Inc. In 2018, this is a cybersecurity company staffed by white hat hackers, including the founders. Before this, they were doing different projects inside and outside the crypto world, and around Ethereum, specifically. For instance, Storm was a developer in the POA network, an Ethereum-based platform that offers a framework for smart contracts, and it's now part of the Gnosis ecosystem. Pertsiv was an independent security consultant in the meantime, and their lives would change in 2019 when they released Tornado Cash. What is Tornado Cash? Well, it's apparently a headache for authorities, but it wasn't done on purpose. In essence, Tornado Cash is a privacy tool on Ethereum

that helps users keep their transactions mostly anonymous. When you send Ethereum-based tokens through Tornado Cash, it mixes your coins with those of other users, making it difficult for anyone to trace where your money came from or where it's going. This way, your financial activities stay private. Here's how it works. You deposit your cryptocurrency into Tornado Cash, which gives you a secret note. Later, you can use this note to withdraw your funds to a different address. Since your coins get mixed with others in the pool, the connection between your original deposit and the final withdrawal is broken, ensuring your privacy. It's like putting your coins into a blender with other sand then taking

it out in a way that no one can tell whose money is whose. Does that sound harmless? It is, in theory. It could work to protect yourself against surveillance, to keep a business transaction secret, or to safely fund a project or group in a hostile territory. Sadly, it also worked for the malicious hacking team dubbed Lazarus Group to launder around $625 million in crypto from a robbery to the Ronin network in 2022, and likely other illegal endeavors. That's assuredly the worst use case for the tool, and the creators of this tool are being blamed for it. Money laundering accusations. The same year of that really big hack and money laundering operation by the Lazarus Group, in August, the U.S. Office of Foreign Assets Control, OFAC, blacklisted Tornado Cash, alleging it was used

for laundering billions in virtual currencies. This led to the suspension of developer accounts and the takedown of their domains. The blacklisting resulted in severe restrictions, including asset freezes and transaction bans, impacting anyone associated with Tornado Cash, even outside the US shortly after, Alexei Pertsev was arrested in Amsterdam, accused of money laundering through Tornado Cash. Pertsev faced significant legal hurdles, spending over nine months in prison before being placed under house arrest. Histriel concluded in May 2024 with a sentence of 64 months in prison, which he is currently appealing. Pertsev's legal team is actively working on the appeal, but it may take several months before a new hearing is scheduled. Roman Storm and Roman Semyonov were similarly

accused in the US in August 2023. Roman Storm was arrested in Washington but was released on a $2 million bond pending his trial. His trial is set for September, where he will face charges similar to those against Pertsev. Roman Semyonov is also under investigation, but is said to remain at large. Despite these legal challenges, the Tornado Cash community and various advocacy groups have shown strong support for the developers. Organizations like CoinCenter, DeFi Education Fund, and the Electronic Frontier Foundation have voiced their support and are assisting in the legal battles. The crypto community continues to rally behind the developers, emphasizing the importance of privacy tools in the digital age. What's next? Tornado Cash itself remains operational as a decentralized protocol on

the Ethereum network, with significant funds still deposited in the platform. However, all the services related to it that aren't decentralized – domains, node providers, webpages, user-friendly interfaces – are being blocked by a lot of companies that aren't willing to face the OFAC blacklisting. Also, if a centralized crypto exchange or stablecoin relates your tokens with Tornado Cash, they may freeze your funds, for the same reasons. In the end, despite it being a decentralized platform available for everyone, there are feasible ways to censor this and other similar services on blockchains. That doesn't mean the work of Pertsev, Similnov, and Storm was foreknot. Besides the fact there are other numerous crypto mixers

around, the ongoing legal proceedings against Tornado Cash developers are a wake-up call that highlights the complex intersection of privacy, technology, and regulation around decentralized services. Our online privacy is something worth fighting for, and no centralized party seems really interested in letting us have that right. Creating code for it shouldn't be a crime. As cypherpunks say in their manifesto, we must defend our own privacy if we expect to have any. Obite, as a directed acyclic graph, DAG, crypto network, offers a higher level of censorship resistance than any blockchain, and that translates to a higher level of privacy as privacy tools like Tornado Cash cannot be censored. It offers a decentralized, autonomous platform that operates independently of centralized

intermediaries such as block producers in blockchains. Unlike blockchain services that can be censored or blocked by block producers due to regulatory pressures, Obite's decentralized nature ensures that users retain control over their transactions without the risk of third-party interference. All developers are more than welcome to keep the Cypherpunk ethos by building here. Read more from Cypherpunk's RightCode series Tim May and Crypto Anarchism. Way Die and Be Money. Nick Sabo and Smart Contracts. Adam Back and Hashgash. Eric Hughes and Remailer. St. Jude and Community Memory, Hal Finney and RPOW, Julian Assange and Wikileaks, John Gilmore and F. Satoshi Nakamoto and Bitcoin, Gregory Maxwell and Bitcoin Core, Ian Grigg and Ricardian Contracts, Vinay Gupta and Maturium,

Featured Vector Image by Gary Killian, Freepik Phot photograph of Roman Semyonov, right, from X, Twitter, photograph of Pertsev, center, and Storm, left, from LinkedIn, and thank you for listening to this HackerNoon story, read by Artificial Intelligence. Visit HackerNoon.com to read, write, learn and publish.