Manhattan Jury Convicts Tornado Cash Co-Founder on Money Transmitting Charge, Deadlocks on Sanctions Violations

A Manhattan jury delivered a split verdict in the criminal trial of Roman Storm, co-founder of Tornado Cash, on August 6, 2025. Storm was found guilty of conspiracy to operate an unlicensed money transmitting business, a charge that could result in up to five years in prison. However, the jury deadlocked on two additional counts: conspiracy to commit money laundering and violations of U.S. sanctions targeting a North Korean hacking group, leading to a partial mistrial [1][2][3]. The case, which spanned three weeks of proceedings, highlights the growing regulatory pressure on decentralized finance (DeFi) protocols, particularly those offering privacy-enhancing features [4].

The U.S. Department of Justice (DOJ) argued that Tornado Cash, a decentralized protocol designed to obscure the trail of cryptocurrency transactions, had been used to launder over $1 billion in stolen digital assets. The prosecution specifically cited its use in laundering funds linked to the Lazarus Group, a North Korean hacking collective sanctioned by the U.S. government [3]. According to federal prosecutors, Storm was aware of the platform’s potential for misuse and continued to profit from its operation [2].

Storm’s defense team, meanwhile, emphasized that Tornado Cash is a noncustodial tool, meaning it does not hold or control user funds. They argued that software developers should not be held criminally liable for how end users choose to deploy open-source technology. The defense also noted that Storm expressed surprise and frustration upon learning of the platform’s exploitation by malicious actors [3]. This legal distinction—between the creator of a tool and its eventual misuse—has become a central debate in the regulation of blockchain-based services.

The verdict has sparked strong reactions from the DeFi and broader crypto communities. Advocacy groups and industry figures have raised concerns that the prosecution sets a dangerous precedent, potentially criminalizing developers for actions beyond their control. The DeFi Education Fund, a nonprofit supporting decentralized innovation, stated that noncustodial protocols like Tornado Cash should not be classified as financial institutions or subject to money transmission laws [3]. Ethereum co-founder Vitalik Buterin publicly supported Storm, noting the project’s alignment with his own advocacy for privacy in digital transactions [3].

The ruling may shape future regulatory strategies toward privacy tools in the crypto space. While the DOJ has long sought to hold developers accountable for the misuse of their platforms, this case could influence how similar prosecutions are handled. Analysts suggest the outcome signals a broader shift in enforcement, with regulators increasingly targeting the infrastructure enabling anonymous transactions [3]. However, the split jury also reflects the legal uncertainties surrounding the role of developers in the decentralized ecosystem.

Storm’s conviction marks the latest in a series of legal actions against crypto privacy services. Earlier in August, the co-founders of Samourai Wallet, another cryptocurrency mixer, also pleaded guilty to similar charges [3]. These developments point to a continued U.S. government focus on curbing illicit activity in the digital asset space, particularly tools that complicate traceability. Yet the outcome in the Tornado Cash case—partial conviction and partial mistrial—also underscores the challenges regulators face in navigating the complex legal status of decentralized protocols.

Roman Storm has indicated he will appeal the guilty verdict, stating: “I am disappointed by the jury’s decision on the unlicensed money transmitter charge, but remain hopeful as we appeal this verdict” [3]. His legal team is expected to challenge the application of money transmission laws to noncustodial protocols, arguing that such a framework is ill-suited for decentralized technology.

Sources:

[1] https://www.businessinsider.com/tornado-cash-roman-storm-trial-partial-mistrial-2025-8

[2] https://www.bloomberg.com/news/articles/2025-08-06/tornado-cash-co-founder-storm-guilty-in-crypto-laundering-case

[3] https://www.theblock.co/post/364948/tornado-cash-creator-roman-storm-found-guilty-on-money-transmitting-charge-but-not-guilty-on-sanctions-charge-inner-city-press

[4] https://www.coindesk.com/policy/2025/08/06/roman-storm-guilty-of-unlicensed-money-transmitting-conspiracy-in-partial-verdict

[5] https://www.dlnews.com/articles/defi/storm-jurors-reach-split-verdict-in-criminal-trial/