Ethereum News Today: DOJ Rests Case in Tornado Cash Trial as Defense Challenges Developer Liability in $1B Laundering Probe

Roman Storm, co-founder of the decentralized privacy tool Tornado Cash, faces federal criminal charges in New York, including conspiracy to operate an unlicensed money transmitter and violating U.S. sanctions. The U.S. Department of Justice (DOJ) alleges that Tornado Cash, a privacy-enhancing protocol on Ethereum, was used to launder over $1 billion in stolen funds, with prosecutors asserting Storm knowingly facilitated illicit activity through its open-source design. The trial, which began in June 2025, entered its closing phase after prosecutors rested their case on June 25, with the defense preparing final arguments. The DOJ’s charges hinge on allegations that Storm’s team knowingly enabled transactions linked to ransomware attacks and hacks [7].

The defense has argued that developers of open-source software cannot be held criminally liable for users’ actions, emphasizing Tornado Cash’s privacy-focused design. Preston Van Loon, an Ethereum core developer, testified that the protocol was built to protect user identity and transaction confidentiality, even if some users exploited it for illicit purposes. Legal experts warn that criminalizing such protocols could stifle innovation in blockchain, particularly for privacy tools, while prosecutors stress the need for accountability in preventing financial crime [1].

The case has drawn significant attention from the crypto community. Vitalik Buterin, co-founder of Ethereum, and Matt Huang of Paradigm have contributed $2.8 million to Storm’s legal defense fund, with Buterin stating, “In Ethereum we protect our own.” Reddit users and privacy advocates have echoed these sentiments, framing the trial as a test of whether open-source software development can be criminalized under anti-money laundering laws. Storm’s legal challenges have also led to collateral consequences, such as his account being deactivated by Gusto, though the firm has not publicly commented on the matter [9].

The trial’s outcome could set a precedent for regulating decentralized technologies and determining liability in blockchain innovation. A conviction might signal a regulatory crackdown on protocols suspected of enabling financial crime, while an acquittal could reinforce the principle that developers cannot be held responsible for users’ actions. Legal analysts note the DOJ’s broader strategy in regulating decentralized finance (DeFi) could be shaped by the case, particularly regarding the boundaries of liability for open-source projects [5].

The trial has also sparked debate about the role of privacy tools in financial technology. Tornado Cash’s legal challenges mirror those faced by similar protocols like Helix and ChipMixer, highlighting recurring questions about developer liability. Ethereum’s market behavior reflects this tension: as of July 26, 2025, ETH traded at $3,744.65 with a 11.70% market dominance, despite a 22.45% drop in 24-hour trading volume. Analysts suggest the trial’s resolution could influence investor confidence and adoption trends in privacy-focused cryptocurrencies [1].

As the defense prepares its final arguments, the trial remains a pivotal moment in the evolving legal landscape for blockchain technology. The coming weeks will determine whether this case becomes a landmark in the regulation of decentralized systems, potentially reshaping how governments approach accountability in open-source software development.

Source:

[1] [U.S. Justice Rests Case in Tornado Cash Trial, Defense Calls Core Ethereum Developer](https://www.ainvest.com/news/ethereum-news-today-justice-rests-case-tornado-cash-trial-defense-calls-core-ethereum-developer-pivotal-witness-2507/)

[5] [Roman Storm’s Team Expected to Close Case Next Week, Developer May Still Testify](https://mx.advfn.com/bolsa-de-valores/COIN/VELOUSD/crypto-news/96500894/roman-storm-s-team-expected-to-close-case-next-we)

[7] [U.S. Department of Justice Considers Charges Against Tornado Cash](https://www.binance.com/square/post/27425375004330)

[9] [Roman Storm Trial: Is Coding a Crime?](https://www.coindesk.com/policy/2025/07/24/roman-storm-trial-is-coding-a-crime-the-tornado-cash-court-battle-intensifies)