Roman Storm of Tornado Cash, a popular privacy mixer in crypto, has been found guilty of planning to operate an unlicensed money transmitting business that helped move over $1 billion in illegal transactions.
The Southern District of New York shared the verdict after a four-week trial led by US District Judge Katherine Polk Failla. Even with this conviction, Storm avoided more serious charges for money laundering and sanctions violations because the jury couldn’t agree on those issues, leading to a partial mistrial.
Storm could face a maximum sentence of five years. During the trial, evidence showed that he was one of the three founders of Tornado Cash. He helped develop its main features, funded important infrastructure, and promoted the mixer.
Prosecutors pointed out that Storm continued to use Tornado Cash even after learning it was handling illegal funds, including a substantial sum linked to the infamous Ronin hack, which the FBI attributed to North Korea’s Lazarus Group.
US Attorney Jay Clayton highlighted the importance of accountability in the crypto area. He mentioned that although digital assets have significant potential, they must not be used to hide criminal activities. The verdict has raised worries in the decentralized finance (DeFi) community, as many see it as a risky example for developers of privacy tools and open-source crypto systems.
Legal experts, like Jake Chervinsky, Chief Legal Officer at Variant, shared their disappointment about the ruling, calling it a “sad day for DeFi.” Chervinsky said that the case shouldn’t have been taken up, claiming that Section 1960 shouldn’t apply to developers of non-custodial protocols who don’t manage user funds. He recommended appealing the case, hoping that higher courts would fix any mistakes in the ruling.
The result of Storm’s trial brings up important questions about how crypto will be regulated in the future and how developers will be treated in the fast-changing DeFi world.
