Pertsev Appeal: Defense Demands Insights Into Chainalysis Software

This morning, Dutch courts held a hearing in preparation for Tornado Cash developer Alexey Pertsev's appeal, which served the purpose of compelling additional evidence from the prosecution. Pertsev was found guilty of money laundering in 2024. His prosecution runs parallel to the prosecution of Tornado Cash developer Roman Storm in the US.

Bitcoin Core developer Sjors Provoost attended the hearing in Den Bosch and shared his insights with The Rage.

Challenging the Evidence

"Alexey's new defense team is challenging evidence presented at his trial last year," Provoost says, "effectively boiling down to the question of what, in the context of money laundering, is the standard for what constitutes proceeds from a crime."

According to Provoost, the defense is criticizing the prosecution for lacking concrete evidence as it is mainly relying on media reports about hacks of which the stolen funds were allegedly laundered through the Tornado Cash service.

"One step in getting a money laundering conviction is to demonstrate that there are proceeds from crime ("gronddelict")," says Provoost. "The defense argues that it's not enough for the government to simply point to some media articles to prove that these crimes actually happened, asking for a conviction in some court or at least a statement from a victim. They also need to prove that these exploits and rug pulls are actually crimes under Dutch law, which isn't obvious."

"The defense is now asking which specific transactions came from the hack, where they went and how the trace can be reconstructed to show that this money did go through the Tornado Cash service," says Provoost.

"As evidence, the defense would just need to look at the Ethereum blockchain, according to the prosecution – but when the defense looked up some addresses provided by the government in Etherscan, the amounts involved did not add up to what the government claimed," says Provoost.

"According to the testimony of an expert witness, this is because the prosecution used Chainalysis software to cluster addresses together, adding up to the expected amount." "This suggests that the government relied more extensively on Chainalysis software in its prosecution than it claims", Provoost says.

The prosecution also claims that Chainalysis only applies clustering techniques in Bitcoin, not in Ethereum, Provoost adds, which too appears to be contradicted by the defense's portrayed experience.

The defense now wants to see how Chainalysis software works and what additional data sources it uses, particularly looking at the software's clustering and labeling, says Provoost. The prosecutor and defense disagree on whether Chainalysis was used for actual evidence, which needs to be disclosed, or merely some guiding information ("sturingsinformatie"), which doesn't need to be disclosed, he adds.

The defense is additionally requesting access to a government-level usage license to Chainalysis software, Provoost says, as they believe there are differences between the software's commercial and governmental capabilities.

The defense will likely attempt to use said license to re-trace the flow of transactions, says Provoost, stating that the defense merely got access to a spreadsheet lacking crucial information, such as transaction hashes.

Who Used the UI

Additionally, the defense is questioning whether illicit actors used the Tornado Cash user interface to launder funds through the Tornado Cash service, Provoost tells The Rage.

To be convicted of a crime, the prosecution has to prove that Pertsev had the ability to control, stop, or otherwise modify the effectively immutable service to stop illicit actors from accessing Tornado Cash, in which the user interface plays a central role as a mutable part of the software.

"The prosecution previously stated that the majority of transactions on Tornado Cash happened through the user interface, which the devs may have had some control over, though they could not have stopped the funds, since the UI can be circumvented," says Provoost.

"But the evidence for the UI usage comes from an analysis of the behavior of just one relayer for the duration of one week, collecting only 123 records. The defense now says that this is not a large enough sample size and potentially unrepresentative to prove that illicit actors used the Tornado Cash interface," Provoost continues. It is unclear whether this analysis was done by Chainalysis or by law enforcement itself, Provoost adds.

"I am curious if they used a honeypot relay for this, hopefully the US case reveals that," Provoost speculates, referring to a node in a network setup to collect information.

More Trouble for Chainalysis

This would not be the first time that Chainalysis, one of the largest blockchain surveillance Government contractors, is challenged in a court of law.

In March of this year, debtors of the defunct cryptocurrency lending platform Celsius sued Chainalysis for deception, alleging that the firm had propped up a fraudulent $3.3 Billion audit of the platform that misled customers and investors.

In the criminal prosecution of alleged Bitcoin Fog operator Roman Sterlingov, the defense questioned the use of Chainalysis' tracing software Reactor, stirring concerns over its scientific accuracy. The court did not share the defense's point of view, effectively clearing the use of Chainalysis software for the collection of evidence in criminal prosecutions. Sterlingov was convicted for operating the early Bitcoin mixer in 2024.

The court will decide whether to grant Pertsev's requests for insight into Chainalysis software on October 2nd. Similar requests for insight into Chainalysis software have previously been denied in the prosecution of Sterlingov on the basis of trade secrecy.

This article is based on the recollection of events by a hearing attendee due to the lack of publicly available court documents in The Netherlands. Hearings do not give the full picture of the issues at hand for lack of available documents. The Rage does not and cannot give warranty for any statements made. If you attended the hearing or are a party to the case and share a different point of view or would like to note a correction, please reach out via stories@therage.co

Independent journalism does not finance itself. If you enjoyed this article, please consider making a donation.