Tornado Cash Co-Founder Faces 40-Year Sentence In Money Laundering Trial

Tornado Cash co-founder Roman Storm is set to face trial on Monday in the Southern District of New York on federal charges that could result in over 40 years of imprisonment. Prosecutors allege that Storm conspired to launder money, violated US sanctions, and operated an unlicensed money-transmitting business through his involvement in Tornado Cash, an open-source protocol designed to conceal blockchain transactions for privacy or illicit activities.

At the core of Storm’s defense is the argument that Tornado Cash is not a business but a decentralized and immutable protocol that he no longer controls. Additionally, code is considered protected speech under the First Amendment in the US. The trial will hinge on whether Storm’s actions amounted to protected speech or crossed into criminal conduct.

Storm moved to the US from Russia in 2008 and later became a US citizen. He discovered Bitcoin in 2014 while working as a software engineer in San Francisco and was inspired by the idea of transacting freely on a decentralized network. In 2019, Storm attended a conference representing his consulting firm, PepperSec, where he met Ethereum co-founder Vitalik Buterin. This meeting led to the creation of Tornado Cash with Alexey Pertsev and Roman Semenov. Pertsev was found guilty of money laundering in the Netherlands and is currently appealing the decision, while Semenov remains at large and is on the US Federal Bureau of Investigation’s wanted list.

Launched in 2019, Tornado Cash is a tool designed to obscure blockchain transaction histories. When a user deposits crypto into the protocol, it generates a secret code that allows them to later withdraw the same amount to a different wallet address. Because deposits and withdrawals are recorded as separate transactions, they are more difficult to trace than typical blockchain transactions. The protocol quickly attracted illicit users, including North Korean hackers, prompting the US Treasury’s Office of Foreign Assets Control to impose sanctions on the protocol in 2022. However, in March 2025, those sanctions were reversed following a civil challenge in Van Loon v. Department of the Treasury, brought by Tornado Cash users.

Judge Katherine Failla, who is presiding over Storm’s case, recently indicated that she is “inclined” to exclude the 2022 sanctions from the trial. Failla has previously overseen major cryptocurrency cases, including the dismissal of a class-action lawsuit against decentralized exchange Uniswap and the Securities and Exchange Commission’s now-dropped lawsuit against Coinbase.

Storm is being prosecuted by a team experienced in crypto crime: Thane Rehn and Benjamin Gianforti, assistant US attorneys in the SDNY. In Storm’s corner, he is represented by a legal team led by Brian Klein of Waymaker LLP and David Patton of Hecker Fink LLP. The defense argues that their client can’t be held responsible for how Tornado Cash was used because the protocol is decentralized and beyond his control. In May 2020, Tornado Cash developers began relinquishing control and moved toward a fully decentralized system. According to the defense, Storm merely wrote and published open-source code. He didn’t run a business, offer a service or manage customers. They cite a 2019 Financial Crimes Enforcement Network guidance that said developers of anonymizing software were not required to register as money transmitters.

That argument has gained traction in related cases. In Van Loon v. Department of the Treasury, the Fifth Circuit ruled that Tornado Cash’s immutable smart contracts were not “property” subject to US sanctions. In Storm’s own case, firms like Paradigm have filed amicus briefs urging the court to weigh the broader consequences of prosecuting open-source software developers. The Blockchain Association, Electronic Frontier Foundation, Coin Center and DeFi Education Fund have also submitted briefs in his defense. A legal fundraiser supporting his case has raised $1.96 million at the time of writing.

“Roman wrote and deployed open-source code. He didn’t launder funds or run a business,” Amal Ibraymi, legal counsel at Ethereum privacy network Aztec Labs, told Cointelegraph. “Prosecuting him for others’ use of that code risks setting a deeply concerning benchmark where writing code for privacy tools becomes a legal liability even when that code is public, permissionless and not under the developer’s control.”

Meanwhile, the prosecution’s indictment distinguishes Tornado Cash’s immutable smart contracts and its frontend interface. Prosecutors allege that Storm and his co-founders paid for US-based web hosting and maintained a website that allowed users to interact with the protocol. They claim the developers retained the ability to modify the UI at will. A key development has been the Trump administration’s crypto-friendly stance compared to that of Joe Biden’s. During the Biden era, the Securities and Exchange Commission faced criticism for its “regulation by enforcement” approach; however, the agency has since dropped several major crypto cases — including some before Judge Failla.

Under the Trump administration was the Department of Justice’s April Blanche Memo. It instructed federal prosecutors to avoid bringing regulatory charges in digital asset cases — such as for unlicensed money transmission — unless they can show the defendant acted willfully and knew of any licensing requirements. “The Blanche Memo makes clear that the DOJ shouldn’t prioritize cases against developers of open-source, general-purpose tools without clear criminal intent,” Ibraymi said. “For this defense team, this presents a strong argument that the prosecution contradicts the DOJ’s own guidance.”

Tornado Cash co-founder Pertsev was found guilty of money laundering by a Dutch court in 2024 and sentenced to over five years in prison. His conviction was based largely on the same argument now being made by US prosecutors. However, the legal framing in the US could sway Pertsev’s appeal process in the Netherlands. Pertsev’s legal team is currently challenging the ruling, arguing that the protocol’s immutability and decentralization make it fundamentally different from a company or custodial service. If Storm is acquitted, or if the US court affirms that writing open-source code is protected speech, it may bolster the defense’s argument that Pertsev was wrongly held accountable for the autonomous actions of a decentralized protocol.

“There’s no doubt that prosecutors in both countries are watching these cases closely. But that scrutiny cuts both ways, and strong legal arguments made in one case can help reinforce the defense in the other,” Ibraymi said. “In particular, with the Fifth Circuit already affirming key principles around decentralization and code, there’s growing momentum to push back against efforts to criminalize developers for building tools they don’t control,” she added. The case against Storm ultimately tests whether publishing open-source privacy software can be considered criminal conduct when that code is later used for illicit purposes. The prosecution argues that Storm knowingly facilitated money laundering beyond coding itself, such as through the project’s user interface. The defense maintains that he simply wrote decentralized code that now operates beyond his control. In a late twist, they also accused prosecutors of misrepresenting key Telegram evidence, saying the government only disclosed critical metadata — showing a reporter’s message was forwarded by Storm, not authored. His trial begins Monday in the SDNY.