U.S. Government Concludes Case Against Tornado Cash Founder via LIFO Method; Defense Challenges Liability for Misuse

The U.S. government is expected to conclude its case against Tornado Cash co-founder Roman Storm by Thursday, following testimony from IRS Criminal Investigation agent Stephan George and a hacker linked to the platform. The prosecution’s focus has shifted to demonstrating that Storm could have mitigated the misuse of Tornado Cash, a decentralized crypto mixer, by bad actors, including state-sponsored hackers. George testified that blockchain analytics tools identified a portion of funds stolen from user Hanfeng Lin in 2021 as having flowed into Tornado Cash, using the Last In, First Out (LIFO) accounting method to trace transactions [1]. Defense attorney Keri Axel challenged the validity of LIFO, but George defended its use as a generally accepted accounting principle [1].

The defense, meanwhile, has emphasized that creating a privacy-focused tool like Tornado Cash does not inherently make its developers criminally liable. Keri Axel argued in her opening statement, “It’s not a crime to make a useful thing that is misused,” highlighting the debate over whether software creators can be held responsible for how their products are used [1]. This tension was further underscored by the testimony of hacker Shakeeb Ahmed, who admitted stealing $12 million in cryptocurrency but clarified he never deposited stolen funds into Tornado Cash. Defense attorneys repeatedly emphasized that Ahmed neither communicated with Tornado Cash founders nor conspired with them [1].

Prosecutors also questioned whether Tornado Cash’s design choices, such as its immutable code and lack of user registration, could have been altered to prevent misuse. Philip Werlau of AnChain.AI testified that while Tornado Cash implemented a Chainalysis oracle to block sanctioned addresses from its web interface, it did not extend these controls to its command-line interface. Werlau likened this to “closing one of two doors to a building,” leaving vulnerabilities unaddressed [1]. Defense attorneys pushed back, arguing that developers cannot be held accountable for unimplemented design choices and that immutable code structures inherently reduce attack surfaces [1].

The trial has drawn attention for its broader implications on crypto innovation and regulation. Marisa Coppel of the Blockchain Association warned that a conviction could deter developers from creating open-source tools, potentially pushing innovation offshore. Conversely, an acquittal might reinforce the principle that software development alone is not a criminal act [1]. Storm’s case hinges on whether the jury accepts the government’s assertion that he conspired to launder funds and violate sanctions, charges that go beyond the specific link to Lin’s stolen funds [1].

While the government rested its case on Thursday, the defense has not finalized whether it will call additional witnesses or pursue a mistrial motion. Storm has yet to decide whether he will testify, and the judge has quipped that “a hacker testifying would be interesting” [1]. The outcome, observers note, may set a precedent for how regulators approach decentralized technologies, balancing privacy with accountability in an evolving legal landscape.

Source: [1] [title: Hacker, IRS agent take Storm trial stand as government winds down case] [url: https://blockworks.co/news/roman-storm-government-may-rest-case]