Ethereum News Today: DeFi Fees Fuel Legal Defense: Blockchain Advocates Challenge Code Liability Precedents

The Ethereum Foundation and Keyring Network have launched a joint initiative to raise funds for the legal defense of Tornado Cash developers Roman Storm and Alexey Pertsev, who face criminal charges related to their creation of the privacy-enhancing cryptocurrency mixer. The program, announced on October 10, 2025, channels protocol fees from Keyring's zkVerified permissioned vaults on Ethereum and Avalanche to support the developers' ongoing legal battles. As of that date, the initiative had raised $22,109.52, with fees from the first two months of vault operations earmarked for defense efforts The Crypto Times^[1].

Roman Storm was convicted in August 2025 on a charge of conspiracy to operate an unlicensed money-transmitting business, though jurors deadlocked on more serious counts of money laundering and sanctions violations. Prosecutors allege Tornado Cash facilitated over $1 billion in illicit transactions, including funds linked to North Korea's Lazarus Group. Storm's defense argues that the protocol operates autonomously and that he did not control its usage. Alexey Pertsev, meanwhile, was convicted in the Netherlands in May 2024 but has since been released from pretrial detention and is appealing his 64-month sentence The Block^[2]. The Ethereum Foundation previously pledged $1.25 million to Pertsev's defense and offered to match up to $500,000 in community contributions for Storm's appeal BeInCrypto^[3].

The initiative represents a novel approach to funding legal defense in the blockchain space, integrating advocacy into a decentralized finance (DeFi) ecosystem. Keyring's zkVerified vaults allow verified users to deposit USDC and earn yield, with protocol fees directly supporting the developers' cases. Alex McFarlane, CEO of Keyring, emphasized that the model aligns with the principles of privacy and compliance, stating, "By donating our early protocol fees to the defense of Roman Storm and Alexey Pertsev, we're signaling that zkVerified DeFi can uphold compliance, safety, and privacy while standing in solidarity with the builders who paved the way" Yahoo Finance^[4].

The legal challenges against Tornado Cash developers have sparked broader debates about the liability of open-source software creators. The U.S. Treasury's 2022 sanctions on Tornado Cash were overturned in March 2025 by the U.S. Court of Appeals for the Fifth Circuit, which ruled that OFAC overstepped its authority by sanctioning immutable smart contracts. The court emphasized that such contracts, operating autonomously without centralized control, do not qualify as "property" under the International Emergency Economic Powers Act Encrypthos^[5]. This ruling has reinforced arguments that criminalizing code development risks stifling innovation in privacy-preserving technologies.

The Ethereum Foundation and Keyring's initiative underscores the growing institutional support for privacy-focused projects. The Foundation's Strategic Funding Coordination team views the effort as a "proof of concept" for future public goods funding, potentially inspiring other DeFi protocols to adopt similar models DL News^[6]. Meanwhile, Pertsev highlighted the importance of community support, stating on X that the initiative is "invaluable to CodeWithoutFear" as his team works toward justice The Block^[7].

The outcomes of these legal cases could set precedents for developer liability in the blockchain industry. If successful, the joint funding model may establish a sustainable framework for defending open-source developers, reducing reliance on one-time donations. As the crypto sector continues to navigate regulatory uncertainty, the initiative highlights the tension between privacy rights and compliance demands, with advocates stressing that "writing code is not a crime" Crypto Impact Hub^[8].