Ethereum Foundation Commits to Doubling $500K Funds for Legal Defense of Roman Storm
In a recent criminal trial, Tornado Cash co-founder Roman Storm was convicted of operating an unlicensed money transmitting business under U.S. law, marking a significant shift in the legal landscape for open-source privacy software developers.
The Tornado Cash protocol, a coin mixer that allows users to obscure cryptocurrency transactions, has been a subject of controversy. The U.S. Treasury Department sanctioned the protocol in August 2022, claiming that over $7 billion had been laundered through it since 2019. The sanctions were lifted in March 2025, but legal challenges continue.
Storm's defense argued that computer code is protected speech under the First Amendment, and criminalizing the development and publication of open-source privacy software is unconstitutional. However, the presiding judge rejected this argument, stating that direct control over the software or its criminal use is not required for liability.
The court ruled that developers can be held liable even if they do not control or upgrade the autonomous software they create. This is a critical shift because it holds developers responsible based on the software's use, not just their direct actions.
The conviction for operating an unlicensed money transmitting business was based on a broad interpretation that facilitating anonymous transactions qualifies as money transmission, even absent custody of funds. This interpretation diverges from earlier FinCEN guidance, which emphasized control over funds, raising controversy and potential grounds for appeal.
The outcome of Roman Storm's case will set a major precedent for developers worldwide. Crypto lawyer Jake Chervinsky called the verdict a sad day for DeFi, as it represents a significant legal precedent with ongoing appeals and policy discussions shaping its future development.
Jeffrey Ding, HashKey Group Chief Analyst, stated that the verdict underscores unprecedented legal territory for open-source privacy software. Wei Wang, co-executive director of the Ethereum Foundation, tweeted that "privacy is normal, and writing code is not a crime."
The Ethereum Foundation has pledged to match up to $500,000 in donations for Roman Storm's legal defense. In July, Storm made an urgent plea for an additional $1.5 million due to rapidly increasing legal costs. The Free Pertsev & Storm legal aid organization emphasized the urgency of continued funding, stating that Storm risks up to 5 years of jail time if he doesn't win the appeal, and potentially decades if the government decides to retry Counts 1 & 3.
Meanwhile, the founders of Bitcoin mixer Samourai Wallet pleaded guilty to conspiracy to operate an unlicensed money transmitter this week, facing up to five years in prison. Prosecutors allege the Samourai Wallet laundered over $100 million, calling it a haven for large-scale money laundering and sanctions evasion.
As the legal landscape evolves, it is clear that developers of privacy-focused decentralized finance (DeFi) software can face criminal liability regardless of direct involvement in illicit activity or control over the software. This has sparked legal and policy debates about how anti-money laundering laws apply to non-custodial protocols and the risks for open-source developers.
Ding also stated that the verdict represents a troubling precedent where authorities are willing to test the limits of applying financial crime statutes to code developers. As the legal journey for Roman Storm continues, it is crucial to monitor the developments closely to understand the implications for the future of open-source privacy software.
- The Tornado Cash protocol, a decentralized coin mixer based on cryptocurrency technology, has been embroiled in controversy due to allegations of money laundering.
- In a similar legal battle, the founders of Bitcoin mixer Samourai Wallet have pleaded guilty to operating an unlicensed money transmitter, facing up to five years in prison.
- The conviction of Roman Storm, co-founder of Tornado Cash, has set a major precedent for developers worldwide, as it holds them responsible for the use of their software, not just their direct actions.
- The Ethereum Foundation, in support of Storm, has pledged to match up to $500,000 in donations for his legal defense, highlighting the importance of open-source privacy software in the decentralized finance (DeFi) technology landscape.
