Tornado Cash Co-Founder Found Guilty on One Charge, Jury Deadlocks on Others

A jury in Manhattan has found Tornado Cash co-founder Roman Storm guilty of operating an unlicensed money transmission business, while deadlocking on more serious charges of money laundering and sanctions violations tied to the North Korean hacker group Lazarus.

In Brief

• Tornado Cash co-founder Roman Storm was found guilty of operating an unlicensed money transmission business, but the jury deadlocked on money laundering and sanctions charges.
• Prosecutors claimed Tornado Cash facilitated $1 billion in laundering, including for North Korea’s Lazarus Group; Storm denied knowing this.
• Crypto advocates, including Vitalik Buterin and the DeFi Education Fund, supported Storm, warning of risks to open-source development and digital privacy.

Jury reaches split decision

Storm, who was charged in 2023, faced allegations of facilitating over $1 billion in illicit transactions via Tornado Cash, a crypto privacy protocol. Prosecutors claim millions of dollars were laundered through the tool by Lazarus, a sanctioned entity linked to multiple high-profile cyberattacks. The trial, overseen by Judge Katherine Polk Failla in the Southern District of New York, ended in a partial verdict after days of deliberation. While the jury agreed Storm operated an unlicensed money transmission service, it could not agree on whether he knowingly engaged in money laundering or violated U.S. sanctions law. Prosecutors argued that Storm was aware of the tool’s use by North Korean actors and profited from it. During closing arguments, they claimed Storm “knew what he was doing” and “made millions.” Storm’s legal team pushed back, stating that Storm and his co-founders never intended Tornado Cash to be used by hackers. “They dropped F-bombs when they found out,” the defense said, quoting internal reactions after discovering Lazarus’ involvement.

Crypto industry rallies behind Storm

Storm has become a symbolic figure in the crypto community’s broader debate around developer liability and financial privacy. Prominent voices, including the DeFi Education Fund and Ethereum co-founder Vitalik Buterin, publicly defended Storm, arguing that non-custodial software developers should not be held responsible for how open-source tools are used. The DeFi Education Fund said:

Our position is clear: developers of noncustodial peer-to-peer protocols do not exercise control or custody over user assets. They are not running money-transmitting businesses under the Bank Secrecy Act.

Buterin took a more personal stance:

You created Tornado in significant part because of my suggestion… it would violate basic honor for me to not support you in your hour of need. In Ethereum we protect our own.

Industry-wide implications

The verdict comes in the wake of another major legal blow to crypto privacy tools. Just last week, the founders of Samourai Wallet, a Bitcoin mixer, pleaded guilty to charges related to money laundering. The Storm case is being closely watched for its impact on future open-source crypto development, particularly around privacy-focused protocols. While the guilty verdict on the unlicensed transmitter charge could carry years in prison, the mistrial on the more severe counts has kept the door open for future legal wrangling.

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Frequently Asked Questions (FAQ)

Tornado Cash and Developer Liability

Q: What was Roman Storm found guilty of? A: Roman Storm, co-founder of Tornado Cash, was found guilty by a jury on one charge: operating an unlicensed money transmission business. Q: What charges did the jury deadlock on? A: The jury deadlocked on the more serious charges of money laundering and sanctions violations. Q: What was the prosecution's argument regarding Tornado Cash's illicit transactions? A: Prosecutors claimed Tornado Cash facilitated over $1 billion in illicit transactions, including laundering for North Korea's Lazarus Group. Q: Did Roman Storm deny knowing about the illicit activities? A: Yes, Roman Storm's defense stated that he and his co-founders never intended Tornado Cash to be used by hackers and quoted internal reactions showing surprise and dismay upon discovering Lazarus' involvement. Q: Why is this case significant for the crypto industry? A: The case is significant because it touches upon developer liability for open-source tools and raises questions about how privacy-focused protocols should be regulated. It's being watched for its impact on future open-source crypto development and digital privacy. Q: What was the stance of crypto advocates like Vitalik Buterin? A: Advocates like Vitalik Buterin and the DeFi Education Fund argued that developers of non-custodial, peer-to-peer protocols should not be held responsible for how their open-source tools are used, as they do not exercise control over user assets.

Legal Precedents and Industry Impact

Q: Are there other recent legal cases involving crypto privacy tools? A: Yes, the article mentions that the founders of Samourai Wallet, another Bitcoin mixer, recently pleaded guilty to money laundering charges, indicating a broader trend of legal scrutiny on privacy-enhancing crypto tools. Q: What are the potential consequences for Roman Storm? A: The guilty verdict on the unlicensed transmitter charge could result in years of imprisonment, although the mistrial on more severe charges leaves the legal outcome somewhat uncertain.

Crypto Market AI's Take

The conviction of a Tornado Cash co-founder highlights the increasing regulatory scrutiny faced by privacy-enhancing technologies in the cryptocurrency space. This verdict underscores the evolving legal landscape and the challenges developers of decentralized protocols may encounter. At AI Crypto Market, we continuously monitor these developments to ensure our users are informed about the regulatory environment, which can significantly impact market sentiment and investment strategies. Understanding these legal nuances is crucial for navigating the complexities of the crypto market, and our AI-driven insights aim to provide clarity in such evolving situations.

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Originally published at Cointribune on Thu, 07 Aug 2025 10:30:00 GMT