Tornado Cash Co-Founder’s Guilty Verdict Raises Red Flags for Crypto Developers and Privacy
The recent conviction of Roman Storm, co-founder and developer of Tornado Cash, has sent shockwaves through the crypto community. Observers are warning that this guilty verdict could set a “dangerous” precedent for developers and privacy, potentially stifling innovation and freedom in the space. Storm was found guilty of operating an unlicensed money transfer company, which carries a maximum prison sentence of five years. Although the jury couldn’t reach a consensus on the charges of conspiracy, money laundering, and violating US sanctions, the prosecution may still retry him on these counts.
The Implications of the Verdict
The crypto industry is reeling from the news, with many experts and lawyers condemning the judgment. The Blockchain Association, a prominent lobby group, has stated that the verdict “is a dangerous precedent for open-source software developers.” They argue that Storm and his team didn’t have control over the funds that passed through the Tornado Cash protocol, which was designed to protect user privacy. The association fears that this ruling could threaten the fundamental principles of open-source software development and user privacy.
Tornado Cash and its Founders
Tornado Cash was launched in 2019 as a cryptocurrency mixer and data protection tool, designed to mask the origin of funds. The project quickly attracted attention from regulatory authorities, particularly in the US, which sanctioned the project in March due to its potential use for money laundering. Storm’s co-founder, Alexey Pertsev, was arrested in the Netherlands in August 2022, while another co-founder, Roman Semenov, remains at large and is on the FBI’s most-wanted list.
Concerns About Liability and Regulation
The guilty verdict has raised concerns about the liability of developers for the actions of their users. Critics argue that developers cannot be held responsible for the misuse of their platforms, especially if they don’t have custody or control over the funds. The US government, however, claims that they are responsible. The Solana Policy Institute has warned that this conviction could have far-reaching implications for decentralized finance (DeFi) and software development, potentially discouraging developers from creating open and decentralized protocols.
Industry Reaction and Next Steps
The crypto industry is rallying around Storm, with the Ethereum Foundation pledging $500,000 to support his ongoing legal costs. The foundation’s co-executive director, Hsiao-Weih Wang, stated that “privacy is normal and writing code is not a crime.” Industry groups are planning to push for clearer regulations and definitions, such as the Clarity Act, which would provide legal clarity on certain aspects of DeFi activity. There is also the possibility of an appeal, with Storm’s supporters hoping to overturn the verdict and establish a more favorable precedent for developers and privacy.
What’s Next for Storm and the Crypto Industry?
While the guilty verdict is a setback for the crypto industry, it’s not the end of the road. Andrew Rossow, a lawyer and head of policy and public affairs at Rossow Law, believes that the divided judgment “is not just about one man or one mixer, it’s a referendum on individual agency in the age of open-source code.” Rossow argues that the verdict “casts a shadow” on developer liability, but the fact that the jury couldn’t reach a consensus on the other charges suggests that the code itself is not inherently “criminal.” The industry will be watching closely as the case unfolds, hoping to establish a more favorable precedent for developers, privacy, and innovation in the crypto space.
