The crypto world is having one of those moments where everyone suddenly remembers that "decentralized" doesn't mean "immune to federal prosecutors." Roman Storm, co-founder of Tornado Cash, just got a reality check courtesy of a Manhattan jury that found him guilty of running an unlicensed money transmission business. The twist? The jury couldn't decide on the bigger charges of money laundering and sanctions violations, leaving everyone in legal limbo.
I've been watching my group chats explode for weeks, and honestly, the crypto community is more divided on Roman Storm than anyone wants to admit publicly. Half my friends think he should rot in prison. The other half think this verdict could kill open-source development forever. Let's unpack that.
Storm helped build software that lets people send crypto privately. Think of it like using a VPN for your transactions. The decentralized nature of the Ethereum contract meant that once the admin keys were burned, Storm and his team literally couldn't control who used Tornado Cash anymore.
It's worth noting that they actually did try to add compliance controls. In 2020 they built a tool that lets users generate cryptographic proof showing the origin of their funds, and in 2022 they implemented a Chainalysis oracle to block sanctioned wallets from the frontend. But prosecutors argued they should have done more, with one witness suggesting they could have made the entire protocol offchain to ensure no bad actors used it (which should sound absurd to anyone who understands Ethereum).
I know hardcore privacy maximalists who think Storm crossed a line, and I know DeFi degens who are genuinely scared they could be next. Because once you start criminalizing code based on how people use it, where exactly does this end?
I spoke to Kasra Rahjerdi, who runs a prominent dev agency and regularly builds apps on Eth and Solana. He put it particularly well: "If Roman goes to jail for writing code that helps money laundering, should the Pump.fun guys go to jail for writing code that helps people rug?" It's a fair question. Pump.fun has facilitated probably billions in retail investor losses through obvious scams, but nobody's talking about prosecuting its developers. Every DEX enables wash trading. Hell, Ethereum itself processes more criminal activity in a week than Tornado Cash did in its entire existence.
But the government's case wasn't really about Storm failing to add controls. It was about him allegedly knowing the tool would be used for money laundering and continuing to promote it anyway. The government argued that Storm knew bad actors were using Tornado Cash to wash over $1 billion in dirty money (later revised down to $660.5M), including funds from North Korean hackers.
Storm's team countered that he wrote code, not a criminal enterprise.
Storm's defenders keep saying "code is speech" and "privacy is normal" or "privacy is not a crime." That's true in theory, but Storm wasn't just publishing academic papers. Prosecutors found promotional materials on his computer that literally asked "Do you wanna know how to stay anonymous on Ethereum?" complete with graphics showing cash and a washing machine. This became one of the prosecution's favorite pieces of evidence, but the materials were literally advertising Tornado Cash's intended use. The project was founded by privacy advocates who believed anonymity was necessary for public blockchains. If you step back, using marketing materials that promote a tool's actual purpose as evidence of criminal intent is a pretty unserious argument for guilt. Although they used this to argue that he was actively marketing Tornado Cash's anonymity features, updating the interface, and yes, watching as North Korean hackers funneled hundreds of millions through his creation. At some point, "I just write code" starts sounding like "I just follow orders."
The prosecution's case got even messier when their own witnesses started falling apart. One prosecution witness got scammed and lost money, then claimed the funds went through Tornado Cash when they actually never touched the protocol at all. Another "expert" witness tried to use dodgy accounting methods to trace funds through Tornado Cash, which got thoroughly debunked by researchers (see below). As one observer noted, "in legal terms that's called perjury lol." When your star witnesses are either lying or fundamentally misunderstand how the technology works, it raises serious questions about the entire case.
The government's case wasn't really about code being illegal. It was about Storm allegedly knowing his tool was being used for massive money laundering and continuing to facilitate it anyway. That's a much harder philosophical line to defend, even if you believe in crypto's utopian promises. Though it’s worth noting that Storm’s defenders aren’t pulling arguments out of thin air. Cases like Junger v. Daley (2000) and Bernstein vs. U.S. (1996-97) established precedent for computer source code as “an expressive means” protected by the First Amendment.Â
Once you deploy code to Ethereum, you genuinely can't modify it anymore. This is 100% true, though many modern contracts are upgradeable because developers have largely stopped caring about immutability. But when Storm and his team built Tornado Cash, true immutability was the norm, not an afterthought. Storm couldn't have stopped bad actors from using Tornado Cash even if he wanted to. The jury convicted him (on one count) anyway. So now every developer has to wonder....
This connects to something way bigger than crypto. Uber is getting sued because drivers assault passengers, and their defense is identical to Storm's: we're just a platform, we can't control what individuals do. Social media companies use the same logic when terrorists coordinate attacks on their platforms. Matthewb, a crypto builder and writer I spoke with, put the prosecution's troubling logic in perspective: "A good example of why the prosecution's case is problematic is someone like Linus Torvalds who built Linux. There's pretty much zero doubt that Linux has been used by terrorists, nuclear programs, etc. But it would be completely unhinged to prosecute him for those wrongs." At what point does building the infrastructure make you complicit in how it's used?
Before the trial even concluded, he was back on X asking for another $1.5 million, explaining that costs were "piling up fast." His legal team had been "working around the clock" and had "forgotten what normal sleep feels like." The crypto community has now raised nearly $5 million toward a $7 million goal, though the total is actually higher since earlier fundraising rounds aren't reflected in the current progress tracker.
Now the Ethereum Foundation is putting serious money where its philosophical mouth is, pledging to match up to $500,000 for Storm's legal defense. This isn't their first contribution either. They've already donated $500,000 plus a $750,000 matching fund for a total of $1.25 million to Storm's case, and separately contributed another $1.25 million to co-founder Alexey Pertsev's defense in the Netherlands.
The conviction on the money transmission charge is genuinely insane when you think about it. Tornado Cash never held anyone’s money, and FINCEN literally published guidance saying non-custodial services aren’t money transmitters. But the DoJ is basically saying “actually, we decide what counts as money transmission now, whatever we say goes.” If this precedent sticks, any self-custody crypto app could suddenly become an unlicensed money transmitter. The Foundation knows that if this twisted interpretation becomes law, every developer working on anything more sophisticated than a basic wallet better start budgeting for criminal defense lawyers.
The industry reaction has been swift and predictably dramatic. Everyone from crypto associations to various policy institutes is screaming about "dangerous precedents" and the "criminalization of open-source development." They're not wrong to be worried. If you can go to prison for writing code that someone else misuses, where does it end? Are crypto developers liable for ransomware payments? Should Ethereum's creators face charges for every rug pull?
It's about whether building powerful tools comes with ongoing moral and legal responsibility for their use. The crypto industry wants to have it both ways: we want to build world-changing technology that's "unstoppable" and "permissionless," but we also want to disclaim responsibility when that technology enables genuinely harmful behavior. Though let's be real about the double standard here. An estimated 99.0-99.6% of global money laundering flows through traditional finance, with only 0.4-1.0% going through crypto. When banks facilitate money laundering, they get fined with a slap on the wrist. When crypto devs build tools that get misused, they get raided at home in front of their toddlers and face federal indictments.Â
You can't regulate immutable code the same way you regulate a bank, but prosecutors are trying anyway because it's easier than writing new laws. These are new things that need new rules, but instead we're getting prosecutors trying to force blockchain technology into legal frameworks designed for banks and money service businesses.
Every privacy protocol, every DeFi innovation, every attempt to build financial tools that governments can't easily monitor is now under a legal cloud. Matthewb pointed out something that makes this whole thing even more ridiculous: Tornado Cash was never actually 100% private. You can often "de-mix" funds by watching flows in and out of the pools and analyzing wallet behaviors. Researchers like Zach and Tay have shown this repeatedly. So basically, the government is prosecuting devs for building a tool that's actually often more traceable than traditional banking, because they're too lazy to learn proper onchain analysis.
Storm's case feels like the second crypto wars all over again. In the 1990s, the U.S. govt classified encryption software as "munitions" alongside bombs and flamethrowers, requiring developers like Phil Zimmermann and Daniel Bernstein to register as arms dealers just to publish their code online. Zimmermann faced a three-year federal investigation for "exporting weapons" when PGP spread internationally, while Bernstein had to sue the government for the right to publish his encryption research without a State Department license. The Electronic Frontier Foundation ultimately won those cases by establishing that software code is protected speech under the First Amendment, but now prosecutors are using different legal theories to achieve the same goal: criminalizing developers who build privacy tools that governments can't easily control.
His co-founders aren't faring much better. Alexey Pertsev was found guilty of money laundering in the Netherlands and is appealing while under electronic monitoring. Roman Semenov remains on the FBI's wanted list. Building Tornado Cash has turned into a very expensive hobby for all three developers.
They're builders who've watched too many projects harm real people while hiding behind "we're just infrastructure" defenses. They think accountability might actually be good for the space long-term, even if it's uncomfortable short-term.
They're terrified that if building tools can land you in prison, innovation will flee to friendlier jurisdictions. They're probably right. But maybe that's not entirely bad if it forces the industry to think harder about the consequences of what we're building.
They couldn't bring themselves to convict Storm of actively facilitating money laundering or conspiracy to evade sanctions, but they also couldn't let him walk away completely free. Even twelve random Americans understand that this case lives in a gray area that our legal system isn't equipped to handle yet.
1. The sole conviction—unlicensed money transmission (18 U.S.C. § 1960)—turns mainly on legal/regulatory interpretation (“does this count as money transmission?”), not jury fact-finding. 2. The court, at the
The jury said "sure, unlicensed money transmission," but couldn't agree on whether Storm was actively helping launder money or violate sanctions. It's like getting a parking ticket when you're on trial for bank robbery. Technically guilty of something, but the big question marks remain.
What makes this case genuinely precedent-setting isn't the guilty verdict on the transmission charge. It's what the jury couldn't decide. Their deadlock on the money laundering and sanctions charges (each carrying 20-year maximums versus the 5-year max for transmission) suggests even regular people (not crypto evangelists) struggle with the idea that building a tool makes you responsible for every bad thing done with it.
The appeals process will likely take years, giving the industry time to push for clearer regulations through Congress. The CLARITY Act, which would create specific legal frameworks for DeFi, suddenly looks less like wishful thinking and more like urgent necessity.
The millions of dollars of pledges towards this case aren't just supporting Storm's defense. It's a bet that crypto's future depends on protecting the right to build experimental technology, even when that technology gets misused. But it's also a signal that the industry still hasn't figured out where legitimate innovation ends and criminal facilitation begins.
Meanwhile, Storm remains free on bail, probably wondering how building a privacy tool for Ethereum transactions turned into a federal case. The answer, as usual in crypto, is that we're all making up the rules as we go along. Sometimes the government gets to make them up faster than we'd like.
Because this isn't really about one developer or one privacy tool. It's about whether the future of finance will be built in America or somewhere with fewer prosecutors and more patience for technological gray areas. It's about whether we can build a more open financial system without also building better infrastructure for every criminal on earth. The crypto community is finally being forced to grapple with the fact that those might not be separable goals.
But enabling money laundering operations might be, even if you do it with really elegant mathematics. The industry is learning that revolutionary technology comes with revolutionary responsibility, whether we're ready for it or not.
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For the builders reading this after yesterday's sentencing, the takeaway isn't to stop building. It's to build smarter. Think before you promote, document your intent. The world needs more founders building privacy tools and decentralized infrastructure, just built by people who understand that innovation and responsibility aren't mutually exclusive.Â
Don't let fear stop you from building the future. Want more nuanced takes on the crypto underground as these cases evolve? Subscribe to our newsletter... we're tracking every story that matters for builders navigating the new rules of the game. ❤️
Cheryl Douglass
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This is a brilliantly nuanced take on a deeply complex issue. You've perfectly captured the dichotomy that the crypto community is grappling with: the tension between fostering permissionless innovation and the undeniable need for accountability. The comparison to the early days of encryption and the PGP legal battles is particularly insightful, reminding us that these aren't entirely new challenges, but rather new manifestations of a long-standing debate. One point that resonates strongly is the inconsistency in how legal standards are applied. The fact that traditional financial institutions receive comparatively lenient penalties for facilitating far greater volumes of illicit transactions highlights a significant double standard. It's crucial that we advocate for regulatory frameworks that are not only technologically informed but also consistently applied across all financial systems. The article does an excellent job of presenting both sides of the argument without succumbing to the tribalism that often plagues these discussions. It forces us, as builders and participants in this ecosystem, to confront a difficult question: how do we build the "unstoppable" tools of the future while still taking responsibility for their potential misuse? Thank you for articulating the stakes so clearly. This is a must-read for anyone building in the space.