The Tornado Cash trial, a high-stakes legal proceeding concerning the co-founder Roman Storm, has 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 trial, noting its potential impact on the broader crypto space. Leading up to the verdict, Tuminelli provided insights into the three charges against Roman Storm, with particular emphasis on the conspiracy to operate an unlicensed money transmitting business charge. As an expert on 18 U.S. Code § 1960, the federal law prohibiting unlicensed money transmitting businesses, she argued that Storm had not violated this statute in the creation and operation of Tornado Cash, an Ethereum-based crypto mixing service.

Discussions surrounding the trial also involved legislative efforts like the CLARITY Act and the Blockchain Regulatory Certainty Act (BRCA). These bills contain language designed to protect developers of “non-controlling” or noncustodial crypto technology, stipulating that such developers and purveyors should not require a money transmitting license nor be subject to existing money transmission laws. Furthermore, Tuminelli highlighted concerns that the Department of Justice’s (DoJ) shift away from 2019 FinCEN guidance threatens innovation in the crypto space. This shift, she argued, could lead to the U.S. government continuing to pursue charges against other developers like Storm, despite a memo from U.S. Deputy Attorney General Todd Blanche stating that the DoJ would cease targeting crypto entities, including mixing services, for the acts of their end users.

The Tornado Cash trial concluded in the Southern District of New York (SDNY) with Roman Storm being found guilty on the second count of his indictment: conspiracy to operate an unlicensed money transmitting business. The jury, after three and a half days of deliberation following a trial that began in mid-July, did not reach a unanimous verdict on the other two counts, which were conspiracy to commit money laundering and conspiracy to violate sanctions. As a consequence of this guilty verdict, Storm now faces a potential prison sentence of up to five years.

Following the verdict, the prosecution sought to have Storm remanded into custody, citing him as a flight risk. However, Judge Failla rejected this motion. The defense, led by Ms. Klein, successfully argued against the government’s assertion by highlighting Storm’s strong ties to the United States, including his home in Washington state secured by a $2 million bail bond, partial custody of his daughter, his girlfriend and green card holder parents residing in the U.S., and significant support from the U.S.-based crypto community. The judge acknowledged that while Storm’s incentives might have shifted post-conviction, the “stability of the verdict is still in play,” likely alluding to the anticipated appeal, before denying the motion to remand.

Shortly after the verdict, U.S. Attorney for the SDNY, Jay Clayton, issued a statement. Clayton asserted that “Roman Storm and Tornado Cash provided a service for North Korean hackers and other criminals to move and hide more than $1 billion of dirty money,” emphasizing that while digital assets offer promise, they cannot excuse criminality. He pledged the office’s commitment to holding accountable those who exploit emerging technologies for crime. Notably, Clayton’s statement did not acknowledge Deputy Attorney General Todd Blanche’s memo about the DoJ’s intent to stop “regulation by prosecution” in crypto, nor did he mention that the vast majority of funds moved through Tornado Cash users were not proven to have been obtained illicitly. The DeFi Education Fund had submitted amicus briefs for both the Tornado Cash and Samourai Wallet cases, though the brief for the former was rejected by the court.