Ethereum News Today: Tornado Cash Co-Founder Convicted Over $1B Laundering Scheme

Roman Storm, co-founder of the Ethereum-based privacy tool Tornado Cash, was convicted on August 6, 2025, by a Manhattan jury for operating an unlicensed money transmitting business under New York state law. The conviction stems from the U.S. Department of Justice’s case alleging that Tornado Cash’s anonymity features were used to facilitate over $1 billion in illicit transactions, including money laundering [1]. The court did not find Storm guilty on more severe charges such as sanctions violations and conspiracy to commit money laundering, which resulted in a hung jury [2].

The legal action, initiated by the U.S. Attorney’s Office for the Southern District of New York, argued that Tornado Cash violated federal regulations by functioning as a money transmission service without the required license. Defense teams countered that the protocol was developed with legitimate use cases and should not be criminalized based on how others might misuse it [3]. The jury’s partial conviction highlights the challenges in applying traditional financial regulations to decentralized, open-source software.

Storm’s conviction has raised concerns within the crypto community about the potential legal exposure of developers for the actions of users. The case could set a precedent that holds creators of privacy-enhancing tools liable for the illicit use of their platforms, even when they do not control user activity [4]. Legal experts note that the ruling may influence how governments regulate decentralized applications and blockchain-based financial infrastructure moving forward [5].

In response, the Ethereum Foundation committed $500,000 to support Storm’s legal defense and later pledged an additional $1 million to cover appeal costs [6]. The Foundation described the case as a critical moment for the industry, emphasizing the importance of protecting open-source innovation from overly broad regulatory interpretations [7]. The move has sparked debates about the balance between financial oversight and technological freedom in the crypto space.

Prosecutors emphasized Storm’s role as a co-founder and architect of Tornado Cash, signaling a shift in regulatory enforcement toward targeting the creators of decentralized systems rather than end-users [8]. This strategy may signal a broader trend in how regulators approach projects offering high levels of financial privacy, particularly in jurisdictions with strict anti-money laundering (AML) laws [9].

Storm has expressed concern that the conviction could jeopardize the future development of privacy-focused technologies and decentralized finance (DeFi) protocols. The case has already prompted discussions about how developers can build and maintain tools that protect user privacy while remaining compliant with evolving regulatory standards [10]. As Storm considers an appeal, the outcome of this case will likely shape the trajectory of regulatory approaches to decentralized financial innovation.

Source:

[1] Tornado Cash Co-Founder Guilty on One Charge (https://www.cointribune.com/en/roman-storm-tornado-cash-verdict/)

[2] U.S. Jury Finds Tornado Cash Co-Founder Guilty in $1B (https://www.ainvest.com/news/jury-finds-tornado-cash-founder-guilty-1b-laundering-case-2508/)

[3] Morning Minute: Tornado Cash Developer Found Guilty (https://finance.yahoo.com/news/morning-minute-tornado-cash-developer-121446021.html)

[4] Ethereum Foundation Backs Tornado Cash Developer with (https://www.tradingview.com/news/cryptonews:7b08c630f094b:0-ethereum-foundation-backs-tornado-cash-developer-with-500k-legal-defense-fund/)

[5] Roman Storm's Tornado Cash Verdict: What It Means for ... (https://news.bitcoin.com/roman-storms-tornado-cash-verdict-what-it-means-for-crypto/)

[6] Roman Storm Convicted in Tornado Cash Case, Faces 5 ... (https://coinpedia.org/news/roman-storm-convicted-in-tornado-cash-case-faces-5-years-in-prison/)

[7] Tornado Cash Founder Convicted of Unlicensed Money ... (https://www.xt.com/en/blog/post/tornado-cash-founder-convicted-of-unlicensed-money-transmitting)

[8] ETH foundation pledges $1m for Tornado Cash's Roman ... (https://www.mexc.com/news/eth-foundation-pledges-1m-for-tornado-cashs-roman-storm-post-guilty-verdict/64261)