Tornado Cash Co-Founder Warns DeFi Industry Faces Existential Threat

Tornado Cash co-founder Roman Storm has issued a stark warning ahead of his upcoming trial, stating that a loss in his case could spell the end of decentralized finance (DeFi). Storm, who faces charges from the Department of Justice (DOJ) for conspiracy to commit money laundering, operating an unlicensed money transmitter business, and evading U.S. sanctions, argues that the prosecution's case against him could set a dangerous precedent for the entire DeFi industry.

Storm's platform, Tornado Cash, allows users to make their on-chain transactions difficult to trace, a feature that has made it popular among privacy advocates but also attractive to criminal organizations and state enemies. The DOJ's case against Storm centers on his role in running this service, which has been used for illicit activities despite its legitimate applications.

Earlier this year, there was hope within the crypto community that Storm might receive a pardon following President Donald Trump's return to power and his directive to federal agencies to ease up on the digital assets industry. This hope was fueled by Trump's decision to shut down the DOJ's crypto-dedicated enforcement unit and his pardon of Ross Ulbricht, the founder of the black market website Silk Road. However, Storm's pardon never materialized, and the DOJ has indicated that it will continue to pursue its case against him.

Storm and other DeFi advocates argue that the prosecution is unfairly holding software developers liable for the ways in which their software is used. This argument is supported by a recent legal filing from the DeFi Education Fund, which states that software developers should not be held criminally liable for the actions of third parties who use their software to commit crimes. The filing was made in support of Alexey Pertsev, another Tornado Cash developer who was convicted by a Dutch court for his role in the platform.

The outcome of Storm's trial could have significant implications for the DeFi industry. If the prosecution prevails, it could set a precedent that holds software developers responsible for the actions of their users, potentially stifling innovation and development in the DeFi space. Conversely, if Storm is acquitted, it could bolster the industry's argument that software developers should not be held liable for the ways in which their software is used.

Despite President Trump's recent pro-DeFi moves, including signing a bill into law repealing an IRS rule protested by the sector and supporting crypto legislation featuring carve-outs for decentralized finance protocols, the continued prosecution of figures like Storm has raised concerns among industry advocates. They warn that a successful prosecution could cause significant harm to DeFi's operating principles and undermine the industry's efforts to promote financial freedom and innovation.