The high-stakes Tornado Cash trial, concluding recently, has brought significant attention to the legal landscape 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, provided crucial insights into the implications of the case, particularly concerning the charges against Tornado Cash co-founder Roman Storm.

The trial focused on three charges, with a deep dive into the conspiracy to operate an unlicensed money transmitting business. Tuminelli, an expert on 18 U.S. Code § 1960 (the federal law prohibiting operating a money transmitting business without a license), argued that Storm had not violated this statute in creating and operating Tornado Cash, an Ethereum-based crypto mixing service. The discussion also highlighted the CLARITY Act and the Blockchain Regulatory Certainty Act (BRCA), which aim to protect developers of “non-controlling” (noncustodial) crypto technology by stipulating they do not need a money transmitting license and should not be subject to existing money transmission laws. Additionally, Tuminelli touched upon how the Department of Justice’s (DoJ) shift away from 2019 FinCEN guidance threatens innovation in the crypto space and could lead to further prosecutions of developers like Storm, despite Deputy Attorney General Todd Blanche’s memo stating the DoJ would stop targeting crypto entities, including mixing services, for end-user actions.

In a pivotal development, Roman Storm was found guilty in the Southern District of New York (SDNY) 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 of 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 motioned to remand Storm into custody, asserting he was a flight risk. However, Judge Failla rejected this motion. The defense argued that Storm had little incentive to flee, citing his $2 million bail bond tied to his Washington state home, his daughter and girlfriend based in the U.S., his parents being green card holders, and the substantial support from the U.S.-based crypto community. Judge Failla concurred, stating that the “stability of the verdict is still in play,” likely referring to an anticipated appeal, and acknowledged that Storm’s “incentives have shifted tremendously,” before denying the prosecution's request.

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.” He emphasized that while digital assets offer promise, this cannot excuse criminality, and committed to holding accountable those who exploit emerging technologies for crime. Notably, Clayton did not acknowledge Deputy Attorney General Todd Blanche’s earlier memo, which outlined the DoJ's intention to cease