Ethereum News Today: Ethereum Developer Testifies Tornado Cash Privacy Tool Challenges Criminal Liability Claims in U.S. Trial

Preston Van Loon, an Ethereum core developer and Prysmatic Labs co-founder, testified in the U.S. trial of Roman Storm, co-founder of the decentralized crypto mixer Tornado Cash, emphasizing the tool’s role in enhancing privacy on the Ethereum network. Van Loon described Tornado Cash as a “privacy tool for Ethereum,” citing his personal use of the service four times to send 43 ether for operational security purposes. His testimony supports the defense’s argument that developers cannot be held criminally liable for how users deploy their software, a stance reiterated by Keri Axel, defense counsel, who stated, “It’s not a crime to make a useful thing that is misused” [2]. The trial centers on whether Tornado Cash developers could have implemented safeguards to prevent misuse by malicious actors, including North Korean state-sponsored hackers from the Lazarus Group.

The prosecution highlighted vulnerabilities in Tornado Cash’s design, noting that while the mixer blocked OFAC-sanctioned addresses via its web application, its command-line interface (CLI) lacked similar protections, creating a loophole for illicit activity [3]. This critique contrasts with the defense’s argument that the protocol’s immutability—a core feature of blockchain technology—enhances security against hacks and should not be penalized. The debate underscores broader tensions between privacy advocates and regulators seeking to enforce compliance in decentralized systems.

Testimonies from witnesses linked to criminal activity further complicated the case. IRS agent Stephan George presented evidence suggesting Tornado Cash received funds stolen from hacker Hanfeng Lin in 2021, though FBI agent Joel DeCapua later failed to establish a direct link between Tornado Cash and the theft [5]. Shakeeb Ahmed, a hacker who pleaded guilty to computer fraud, denied depositing stolen funds into Tornado Cash or contacting its developers, casting doubt on the prosecution’s narrative [6]. These inconsistencies highlight the challenges of attributing criminal conduct to open-source tools and raise questions about the feasibility of regulating decentralized protocols.

The legal battle has already influenced Ethereum’s market dynamics, with minor price declines observed and an uptick in staking exit requests. Exchanges have also adopted cautious stances toward Tornado Cash-linked assets due to regulatory risks [1]. Marisa Coppel of the Blockchain Association warned that a conviction could set a “dangerous precedent” by criminalizing open-source code development, potentially stifling innovation and driving it offshore [7]. Conversely, an acquittal might reinforce the principle that software creation itself is not a crime, offering clarity for developers navigating privacy and compliance challenges.

As the trial progresses, the defense has not yet decided whether Storm will testify, while the prosecution anticipates resting its case by Thursday. The outcome will likely shape regulatory approaches to decentralized finance (DeFi) and establish legal precedents for future projects balancing privacy with compliance.

Source:

[1] Cointelegraph, [https://cointelegraph.com/news/ethereum-core-developer-testifies-roman-storm]

[2] Blockworks, [https://blockworks.co/news/roman-storm-government-may-rest-case]

[3] Blockworks, [https://blockworks.co/news/roman-storm-government-may-rest-case]

[5] Blockworks, [https://blockworks.co/news/roman-storm-government-may-rest-case]

[6] Blockworks, [https://blockworks.co/news/roman-storm-government-may-rest-case]

[7] Blockworks, [https://blockworks.co/news/roman-storm-government-may-rest-case]