The Tornado Cash trial has reached its conclusion with significant implications for developers of noncustodial Bitcoin and crypto technology, as well as privacy-preserving software. Amanda Tuminelli, executive director and chief legal officer for the DeFi Education Fund, closely followed the high-stakes proceedings, offering insights into the legal landscape. The trial centered on Tornado Cash co-founder Roman Storm, who faced three charges, with a particular focus on the conspiracy to operate an unlicensed money transmitting business.

Tuminelli, an expert on 18 U.S. Code § 1960, the federal law prohibiting the operation of an unlicensed money transmitting business, contended that Storm had not violated this statute in creating and operating Tornado Cash, an Ethereum-based crypto mixing service. The discussion also highlighted legislative efforts like the CLARITY Act and the Blockchain Regulatory Certainty Act (BRCA). These bills contain language designed to protect developers of non-controlling (noncustodial) crypto technology, stipulating that such developers and purveyors should not require a money transmitting license or be subject to existing money transmission laws.

A critical point of concern raised by Tuminelli was the Department of Justice’s (DoJ) shift away from 2019 FinCEN guidance. This shift, she argued, threatens innovation in the crypto space and could lead to continued prosecution of developers like Storm, despite an April memo from U.S. Deputy Attorney General Todd Blanche stating that the DoJ would cease targeting crypto entities, including mixing and tumbling services, for the acts of their end users.

In a pivotal development, Roman Storm was found guilty by a jury in the Southern District of New York (SDNY) on the charge of conspiracy to operate an unlicensed money transmitting business. The jury, however, did not reach a unanimous verdict on the other two counts: conspiracy to commit money laundering and conspiracy to violate sanctions. This guilty verdict, reached after three and a half days of deliberation following a trial that began in mid-July, means Storm now faces up to five years in prison.

Following the verdict, the prosecution motioned to remand Storm into custody, asserting he was a flight risk. Judge Failla rejected this motion, with the defense's Ms. Klein arguing that Storm had little incentive to flee given his significant ties to the U.S. These ties include a $2 million bail bond tied to his Washington state home, partial custody of his daughter, his girlfriend’s U.S. residency, his parents being green card holders, and the substantial support from the U.S.-based crypto community. Judge Failla acknowledged that Storm's incentives had shifted but also noted that the