Ethereum News Today: Tornado Cash Trial Pivots on Privacy Tool Defense vs. Prosecution's Criminal Facilitation Claims

The trial of Roman Storm, co-founder of the Ethereum-based cryptocurrency mixer Tornado Cash, entered a pivotal phase as defense arguments emphasized the tool’s role as a privacy-enhancing technology rather than an instrument for criminal activity. Preston Van Loon, an Ethereum core developer, testified on July 13 as the defense’s first witness, describing Tornado Cash as a “privacy tool for Ethereum” comparable to encrypted messaging apps or virtual private networks. Van Loon, who admitted using the mixer four times between 2019 and 2020 to send 43 Ether, argued that obscuring transaction details was necessary to protect users from potential targeting by malicious actors [3]. His testimony aligns with the defense’s broader strategy to frame Tornado Cash as a legitimate innovation designed to address inherent transparency limitations in blockchain transactions.

Prosecutors, however, have countered by asserting that Storm retained de facto control over Tornado Cash’s funds through its smart contract architecture, challenging claims of full decentralization. IRS Agent Stephan George testified that public blockchain data, combined with tools like Chainalysis Reactor, linked portions of stolen funds from hacker Shakeeb Ahmed to Tornado Cash in 2021. George also defended the IRS’s use of the Last In, First Out (LIFO) accounting method during cross-examination, though defense attorney Keri Axel questioned its relevance to the case [1]. The prosecution’s argument hinges on the assertion that Tornado Cash’s design facilitated illicit activity, particularly its alleged ties to North Korean hackers affiliated with the Lazarus Group.

The defense has sought to undermine these claims by highlighting structural limitations of blockchain technology. AnChain.AI investigator Philip Werlau testified that while Tornado Cash blocked OFAC-sanctioned addresses via its web interface, it lacked similar controls for command-line deposits. Defense attorneys used this during cross-examination to underscore the impracticality of enforcing user compliance in a decentralized system where personal information is rarely provided [1]. Additionally, FBI Special Agent Joel DeCapua failed to establish a direct link between stolen funds from victim Hanfeng Lin and Tornado Cash, though IRS Agent George later confirmed partial movement of the funds through the mixer. The defense argued this did not establish Storm’s culpability, emphasizing that software creators cannot be held responsible for misuse by third parties.

The case has drawn significant attention from the cryptocurrency industry, with legal experts warning of its potential to reshape regulatory frameworks. Marisa Coppel, legal director of the Blockchain Association, noted that a conviction could criminalize open-source development, stifling innovation in decentralized finance. Conversely, an acquittal might reinforce the principle that creating privacy tools is not inherently illegal. Roman Storm, charged with conspiracy to commit money laundering and operating an unlicensed money transmitter, has not yet decided whether to testify. His defense team could rest their case as early as July 28, while the prosecution expects to conclude by July 25 [1].

Van Loon’s prior legal battles against U.S. Treasury sanctions on Tornado Cash’s smart contracts have added context to the trial. His testimony reflects broader tensions within the crypto community over privacy rights and regulatory overreach, with the outcome likely to influence future debates on the boundaries of decentralized technology. The jury’s focus remains on whether Tornado Cash’s decentralized nature absolves its creators from liability for its misuse, a question that could set a precedent for the legal status of open-source crypto tools.

Source:

[1] Blockworks, "Roman Storm Trial Heats Up as Feds Claim Control Over Tornado Cash," July 7, 2025, https://blockworks.co/news/roman-storm-government-may-rest-case

[2] CoinDesk, "Roman Storm Trial: Is Coding A Crime? The Tornado Cash Court Battle Intensifies," July 24, 2025, https://www.coindesk.com/policy/2025/07/24/roman-storm-trial-is-coding-a-crime-the-tornado-cash-court-battle-intensifies

[3] TheCoinrise.com, "Tornado Cash Trial Sees Ethereum Developer Defend Roman Storm," July 4, 2025, https://thecoinrise.com/tornado-cash-trial-sees-ethereum-developer-defend-roman-storm/

[4] AInvest, "IRS Alleges Roman Storm Retained Control Over Tornado Cash Funds in Landmark Trial," July 24, 2025, https://www.ainvest.com/news/irs-alleges-roman-storm-retained-control-tornado-cash-funds-landmark-trial-2507/