The founder of Tornado Cash was sentenced for conspiracy to commit Money Laundering. Is this punishment fair?

Original author: ChandlerZ, Foresight News

Reprint: Oliver, Mars Finance

On August 6, 2025, a jury at the federal court in Manhattan, New York, found Tornado Cash co-founder Roman Storm guilty in a criminal case. The verdict immediately sparked strong attention and reactions throughout the entire cryptocurrency industry.

Storm was charged with three counts: conspiracy to operate an unlicensed money transfer business, conspiracy to commit money laundering, and conspiracy to violate U.S. sanctions against North Korea. After three weeks of trial, the jury was unable to reach a unanimous verdict on the first two felony charges, only finding him guilty of "operating an unlicensed money transfer business." This charge carries a maximum penalty of five years in prison.

Tornado Cash is a non-custodial privacy tool deployed on Ethereum that allows users to obscure transaction paths through smart contracts. It uses zero-knowledge proofs (zk-SNARKs) technology, where users first deposit funds and then complete withdrawals via a receipt, thus obscuring the source and destination of the funds. Tornado Cash itself does not hold funds and cannot be altered or shut down once deployed.

In August 2022, the U.S. Office of Foreign Assets Control (OFAC) added Tornado Cash to its sanctions list, accusing it of being used for money laundering by hacker groups such as Lazarus. However, in March 2025, the U.S. Fifth Circuit Court of Appeals ruled that OFAC had exceeded its authority, stating that smart contracts are not property and cannot be sanctioned. Subsequently, OFAC withdrew the sanctions against Tornado Cash and removed the relevant Ethereum addresses. However, Roman Storm's legal troubles are still not over.

The announcement of the verdict has once again sparked controversy over the boundaries between law and technology.

Roman Storm is a software engineer and one of the early developers in the cryptocurrency industry. He is best known as one of the co-founders of Tornado Cash. Storm developed this project alongside another co-founder, Roman Semenov, and it was officially launched in 2019. Since its launch, Tornado Cash has attracted a large number of users, including attackers, fraudsters, and even state-sponsored hacker organizations.

After the release of Tornado Cash, Storm was mainly responsible for building and maintaining the front-end interface, as well as writing technical documentation and accepting media interviews to promote the project in its early stages. He publicly supported blockchain privacy technology and emphasized individual financial autonomy. In 2023, Storm was arrested by the U.S. Department of Justice, becoming the first developer to be prosecuted in the Tornado Cash case.

The U.S. Department of Justice has accused Storm and other developers of continuing to maintain the system despite knowing that Tornado Cash was being misused, and assisting in the anonymous transfer of funds by providing "front-end services," promotional documentation, and other means. The prosecution pointed out that organizations, including the Lazarus Group, used Tornado Cash to launder over $1 billion.

During the trial, the prosecution presented a photo of Storm wearing a "Anonymous Money Laundering" themed T-shirt, attempting to prove that he was fully aware of the use of funds. The jury ultimately could not reach a consensus on the money laundering and sanction charges, and the court declared the trial on these two charges a failure.

After the verdict, the prosecution proposed to detain Storm, citing that his place of birth is a former Soviet country (Kazakhstan) and that he "has the conditions for fleeing." Judge Katherine Failla rejected this request, stating that Storm holds a U.S. passport, has lived in Seattle for a long time, and lives with his young daughter, which does not constitute a flight risk.

Storm is currently still on bail, and the sentencing date has not yet been determined. The lawyer stated that they plan to challenge the conviction and file an appeal.

The boundaries of developer responsibility are under scrutiny, and the cryptocurrency industry is reacting strongly.

After the judgment results were announced, several cryptocurrency industry organizations quickly expressed their stance, questioning the characterization of "unlicensed remittance." The focus of the controversy is on one question: Should open-source developers bear legal responsibility for others' use of their code?

The DeFi Education Fund stated on X: "We regret that the jury failed to recognize that Storm cannot control third-party behavior." The organization emphasized: "Software developers should have the right to write and deploy decentralized financial tools, including protocols with privacy features."

Peter Van Valkenburgh, the executive director of Coin Center, also believes that the accusation is "inappropriate" and calls for an immediate appeal. He stated that Coin Center will utilize all resources to push the case into the next phase of review.

The Blockchain Association described this ruling as "disappointing" and potentially creating a chilling effect on all open-source software developers: "We urge Storm to appeal and are ready to support at any time."

Multiple independent legal professionals have also expressed their views on this case. Brian Klein, a partner at Waymaker LLP and the defense attorney for Storm, stated: "The core issue of this case is whether the author can be brought to the defendant's seat because someone else did something bad using a piece of code." He believes that current laws do not apply to non-custodial systems like Tornado Cash and plans to continue legal challenges against this charge.

Alex Urbelis, the legal advisor for Ethereum Name Service, also pointed out that the jury might not fully understand how non-custodial protocols operate. He stated, "If the jury can understand that Tornado Cash does not have control over users' assets, then there should not be this conviction."

It is still unclear whether the next step will be a re-examination, and preparations for the appeal are ongoing.

Although the two charges that have not been convicted are temporarily shelved, the case is far from over. The prosecution has yet to decide whether to initiate a retrial for "money laundering" and "sanctions violations," but many predict that, considering the jury's prolonged inability to reach a consensus, the Department of Justice may choose to abandon these two charges.

Storm reacted strongly. After the verdict, he quoted Trump's original words, saying he would "fight, fight, fight." His defense team stated that Storm would continue to contest in court and urged the industry to unite to collectively face the issues of unclear regulation.

After Trump took office, he tended to weaken regulation on cryptocurrency companies, and several major lawsuits were withdrawn or paused earlier this year. The Storm case has become one of the few significant cases still progressing. However, before this case, two developers of Samourai Wallet pleaded guilty last week, also facing charges related to "unlicensed remittance." This development has raised higher vigilance in the cryptocurrency industry regarding the current strategies of the judiciary.

Jake Chervinsky, the chief legal officer of the crypto investment firm Variant, pointed out that this conviction could provide a basis for future enforcement by the U.S. Financial Crimes Enforcement Network (FinCEN). He believes that if a developer is sentenced for writing code, it would create significant uncertainty for the entire open-source community.

Currently, Storm's defense team is preparing appeal materials, aiming to overturn the verdict. The organizations supporting him are also reaching out to other legal experts and policy advocates, planning to promote clearer guidelines at the legislative level.