Tornado Cash Co-Founder Faces 45 Years in Prison for Alleged Money Laundering

Jury selection in the criminal trial of Tornado Cash co-founder and developer Roman Storm concluded on Tuesday, with prosecutors and defense attorneys presenting their opening statements in a case that could have significant repercussions for the crypto and blockchain industry. Prosecutors focused on linking Storm to North Korean hackers who allegedly used Tornado Cash to launder funds, violating U.S. sanctions. The Lazarus Group, a notorious cybercrime organization, was implicated in a 2022 hack of the Ronin Bridge, resulting in the theft of approximately $600 million in cryptocurrency.

Assistant U.S. Attorney Kevin Mosley emphasized that Storm was profiting from a system designed to launder illicit funds. Mosley argued that Storm continued to commit crimes even after learning that his platform was being used by criminals. The trial has garnered attention from prominent figures in the crypto and blockchain industry, who are concerned about the potential impact of the verdict on developers creating new products. While Storm appeared in federal court, his co-defendant, Roman Semenov, remained at large.

The defense team argued that Tornado Cash is a privacy protocol available to everyone and that Storm should not be held criminally responsible for others using it to launder illicit funds. The prosecution objected to hypothetical references made by the defense regarding the physical safety of users. Storm's lawyer, Keri Axel, asserted that Storm had no involvement in the hacks and that the government's case hinged on the idea that Storm should have taken action against the pools. Axel compared Tornado Cash to other tools that can be misused, such as Signal or a hammer, and argued that the government could not prove a criminal agreement for a criminal purpose.

The trial is ongoing, with the government calling its first witnesses. Storm estimated that the proceedings could last about a month. The prosecution's case rests on the novel theory that writing code for a privacy protocol can be considered a criminal act, as it allegedly facilitated the laundering of funds for cybercrime organizations. Storm faces charges of conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business, and conspiracy to violate U.S. sanctions. If convicted, he could face up to 45 years in prison.

The defense's argument challenges the prosecution's theory, asserting that writing code cannot be considered a criminal act. The outcome of the trial could set a precedent for the legal implications of developing privacy protocols and the responsibility of developers for the actions of users. The trial's significance lies in its potential to shape the legal framework surrounding privacy protocols in the cryptocurrency industry. The defense contends that the government's case is based on a dangerous precedent that could have far-reaching implications for developers and the industry as a whole.