Roman Storm Convicted in Tornado Cash Case Amid Legal Precedent Fears

The conviction of Roman Storm, co-founder of the cryptocurrency mixer Tornado Cash, has sparked widespread concern within the crypto industry, with legal experts warning it may set a "dangerous precedent" for open-source developers and privacy-focused technologies. On August 6, a U.S. federal jury found Storm guilty of operating an unlicensed money-transmitting business, a charge that carries a potential maximum sentence of five years. However, the jury deadlocked on two other charges—conspiracy to commit money laundering and conspiracy to violate U.S. sanctions—meaning federal prosecutors could seek a retrial on those counts [1].

Tornado Cash, developed by Storm, Alexey Pertsev, and Roman Semenov in 2019, functions as a privacy tool designed to obscure the origins of cryptocurrency transactions. The project quickly drew scrutiny from U.S. regulators, who sanctioned it for its potential use in facilitating financial crimes. Pertsev was arrested in the Netherlands in 2022, while Semenov remains at large and is currently listed as a fugitive by the FBI. Storm was arrested in the U.S. in 2023 [1].

Legal challenges to the case were rejected by Judge Katherine Failla in September 2024, who ruled that Tornado Cash qualifies as a money transmitter under federal law, regardless of whether developers have control over user funds. This decision has raised concerns that developers could be held liable under anti-money laundering (AML) and know-your-customer (KYC) regulations for how users misuse their platforms [1].

The Blockchain Association, a U.S. crypto industry lobby group, criticized the verdict, stating it "sets a dangerous precedent for open-source software developers." It emphasized that Storm did not control the assets transferred through Tornado Cash and that the ruling could extend to criminalizing developers of messaging apps, web browsers, or any software that may be misused [1].

The Solana Policy Institute added that the conviction reflects a "fundamental misunderstanding" of decentralized technology, noting that developers of non-custodial, open-source protocols cannot be held responsible for misuse when their systems operate through immutable smart contracts [1].

Andrew Rossow, a policy attorney at Rossow Law, commented that the verdict "casts a shadow" over developer liability but also noted that the jury’s inability to reach a consensus on the other charges supports the idea that code itself is not inherently criminal—especially in censorship-resistant and permissionless environments [1].

Industry groups are now pushing for legislative clarity. The Solana Policy Institute is advocating for the CLARITY Act, which would define legal boundaries for DeFi activity. The Blockchain Association urged a cessation of "regulation by prosecution," a term referencing the Biden administration's approach to crypto regulation through enforcement actions [1].

An appeal remains a possibility. Ji Kim, CEO of the Crypto Council for Innovation (CCI), stated that an appeal to the Second Circuit is necessary to clarify the legal definition of a money transmitter. Both the CCI and the Blockchain Association have expressed support for challenging the ruling [1].

Storm has yet to publicly comment on his conviction, and it remains unclear whether he will pursue an appeal. His sentencing date has not been set [1].

The Ethereum Foundation pledged to match $500,000 in legal expenses for Storm, reinforcing the community’s stance that "privacy is normal" and "writing code is not a crime" [1].

Source:

[1] title: Roman Storm conviction for Tornado Cash sets ‘dangerous precedent’

url: https://cointelegraph.com/news/roman-storm-conviction-tornado-cash-sets-dangerous-precedent