The Code and the Crime: The Tornado Cash Verdict and the Shadow of Innovation
In the fluorescent-lit chambers of a Manhattan courtroom, on a sultry August day in 2025, the fate of Roman Storm, co-founder of the cryptocurrency mixer Tornado Cash, was sealed – not with a gavel’s decisive crack, but with the muted rustle of a jury’s partial verdict. After a four-week trial in the Southern District of New York, Storm was convicted of conspiring to operate an unlicensed money-transmitting business, a charge carrying a maximum sentence of five years.
The jury, however, could not agree on the graver accusations of money laundering and sanctions violations, leaving a cloud of ambiguity over the case that has become a lightning rod for debates about technology, privacy, and the long arm of the law. This verdict, delivered under the stern gaze of U.S. District Judge Katherine Polk Failla, is not merely a legal footnote but a seismic event in the uneasy dance between innovation and regulation, a moment that lays bare the tensions of a world where code can be both a shield for liberty and a sword for crime.
The government’s case, as articulated by U.S. Attorney Jay Clayton, painted Tornado Cash as a digital laundromat, a sophisticated machine that churned through more than $1 billion in illicit cryptocurrency, including hundreds of millions tied to the Lazarus Group, a North Korean cybercrime syndicate. Prosecutors argued that Storm, a 36-year-old software developer from Auburn, Washington, was no mere coder but a knowing architect of a system that enabled criminals to obscure their ill-gotten gains. They pointed to evidence of Storm’s awareness – private messages where he fretted over hacks like the Ronin Bridge heist, in which $600 million in crypto was funneled through Tornado Cash – as proof that he willfully facilitated the transmission of “dirty money.” The service, they contended, was less about privacy than profit, with Storm and his co-founders pocketing over $12 million from their creation. “The real money wasn’t in so-called ‘privacy’ for normal people,” prosecutor Benjamin Gianforti declared, dismissing the defense’s narrative as a convenient distraction. To the government, Tornado Cash was a tool designed to thrive on the underbelly of the blockchain, a “giant washing machine” for the proceeds of cybercrime.
Yet, to understand the government’s position is to peer into the broader anxieties of a state grappling with the anarchic promise of decentralized finance (DeFi). Tornado Cash, launched in 2019 by Storm, Roman Semenov, and Alexey Pertsev, was a marvel of cryptographic ingenuity. Built on the Ethereum blockchain, it used zero-knowledge proofs to pool and anonymize cryptocurrency transactions, severing the traceable link between sender and recipient. For privacy advocates, this was a bulwark against the panopticon of public ledgers, where every transaction is an open book. Vitalik Buterin, Ethereum’s co-creator, has championed such tools, arguing that privacy is not just ideological but pragmatic – a shield against hackers, scammers, and even physical threats like the “wrench attacks” that target crypto holders. The government, however, saw a darker utility: a haven for criminals, from North Korean hackers to fraudsters who boasted of “washy, washy” transactions. The Treasury’s Office of Foreign Assets Control (OFAC) had already blacklisted Tornado Cash in 2022, citing its role in laundering $7 billion, including $455 million stolen by the Lazarus Group. Though those sanctions were lifted in March 2025 after a federal appeals court ruled that immutable smart contracts aren’t “property” under OFAC’s purview, the criminal case against Storm pressed on, a vestige of the Biden administration’s aggressive stance on crypto.
The government’s argument hinges on a fundamental assertion: that Storm’s operation of Tornado Cash was not just code but commerce, a business subject to the same regulatory scrutiny as a bank or wire service. Under the Bank Secrecy Act, money transmitters must register with the Financial Crimes Enforcement Network (FinCEN) and implement know-your-customer (KYC) and anti-money-laundering (AML) protocols. Tornado Cash, prosecutors alleged, flouted these rules, operating without a license and without safeguards to prevent illicit use. They pointed to Storm’s control over the user interface – a front-end portal through which most transactions flowed – as evidence that he could have, but didn’t, curb criminal activity. In one damning exchange, Storm and Semenov discussed adding a sanctioned wallet to a blocklist but admitted privately that the measure was “easy to evade.” To the Justice Department, this was not negligence but complicity, a deliberate choice to prioritize profits over compliance. The conviction on the money-transmitting charge reflects the jury’s agreement that Storm crossed a regulatory line, even if they couldn’t pin him for the more sinister accusations of laundering or sanctions evasion.
But to view this case solely through the lens of criminality is to miss the deeper philosophical rift it exposes. Storm’s defense, led by attorneys Keri Curtis Axel and Brian Klein, framed Tornado Cash as a triumph of decentralization, a non-custodial protocol that, once deployed, ran autonomously on Ethereum’s blockchain. In 2020, the founders “burned the keys,” relinquishing control over the smart contracts, a move akin to launching a ship without a rudder. This, they argued, absolved Storm of responsibility for how the tool was used. “You’ll never hear any evidence that Roman or the other co-founders participated in any hacks,” Axel told the jury, emphasizing that Storm was a developer, not a conspirator. The defense called experts like Matthew Green, a Johns Hopkins cryptography professor, who testified that privacy tools like Tornado Cash are essential to counter the vulnerabilities of transparent blockchains. Green spoke of “wrench attacks” and phishing scams, painting a world where anonymity is a necessity, not a luxury. The jury’s acquittal on sanctions violations and deadlock on money laundering suggest they were swayed, at least in part, by this narrative – that Storm’s intent was to innovate, not to abet.
The crypto community has rallied around Storm, seeing his trial as a referendum on the right to code. Over $2.5 million in donations, including $500,000 from the Ethereum Foundation, has fueled his defense, with groups like the Blockchain Association and Coin Center filing amicus briefs arguing that criminalizing developers for misuse of their software threatens the soul of open-source innovation. On X, voices like @tayvano_ and @molly0xFFF have decried the prosecution’s technical misunderstandings, pointing to inconsistencies in how regulators classify decentralized protocols. The lifting of OFAC sanctions in 2025, under a Trump administration friendlier to crypto, only amplified these sentiments, with some calling the case a relic of overreach. Yet, the government’s resolve – bolstered by the FBI, IRS, and the DOJ’s Illicit Finance and Money Laundering Unit – underscores a countervailing fear: that unchecked DeFi could erode the financial system’s integrity, enabling rogue states and cybercriminals to operate with impunity.
The partial verdict is a kind of uneasy truce, a “splitting of the baby,” as former prosecutor Mark Bini put it. It acknowledges the government’s regulatory concerns without fully endorsing its portrayal of Storm as a criminal mastermind. For the Justice Department, the conviction is a warning shot to DeFi developers: innovation does not exempt you from the law. For the crypto world, it’s a chilling signal that the state may seek to shackle code itself, holding creators liable for the sins of their users. As Storm awaits sentencing and a possible appeal, the case leaves a lingering question: can the promise of decentralized finance – freedom, privacy, trustlessness – coexist with a legal system built on control and accountability? In the shadow of this verdict, the blockchain’s dream of a borderless economy feels both tantalizingly close and perilously fragile.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
