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, provided crucial insights into the high stakes involved, particularly concerning the charges against Tornado Cash co-founder Roman Storm.

Before the verdict, Tuminelli detailed the three charges levied against Storm, with a specific focus on the 'conspiracy to operate an unlicensed money transmitting business' charge. She highlighted her expertise in 18 U.S. Code § 1960, the U.S. federal law prohibiting unlicensed money transmitting businesses, arguing that Storm had not violated this statute in creating and operating Tornado Cash, an Ethereum-based crypto mixing service. The legal discourse also touched upon the CLARITY Act and the Blockchain Regulatory Certainty Act (BRCA), both of which contain language designed to protect developers of 'non-controlling' (noncustodial) crypto technology, stipulating that such developers do not require a money transmitting license and should not be subject to existing money transmission laws. Tuminelli further expressed concern over the Department of Justice’s (DoJ) shift away from 2019 FinCEN guidance, fearing it could stifle innovation in the crypto space and potentially lead to further prosecutions of developers like Storm. This concern persists despite a memo from U.S. Deputy Attorney General Todd Blanche indicating the DoJ would cease targeting crypto entities, including mixing services, for the actions of their end users. The DeFi Education Fund actively supported the defense through amicus briefs for both the Tornado Cash and Samourai Wallet cases, though the brief for the former was ultimately rejected by the court.

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 an unlicensed money transmitting business'. This verdict followed three and a half days of jury deliberation after the trial began in mid-July. The jury did not reach a unanimous verdict on the other two counts, 'conspiracy to commit money laundering' and 'conspiracy to violate sanctions'. As a result of the guilty verdict on the money transmission charge, 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, represented by Ms. Klein, argued against remand, citing Storm's substantial ties to the U.S., including a $2 million bail bond linked to his Washington state home, partial custody of his daughter, his girlfriend’s U.S. residency, his parents' green card status, and the support of a significant portion of the U.S.-based crypto community, which is expected to back his appeal. While the prosecution contended that a conviction increased Storm’s incentive to flee, Judge Failla was unconvinced, stating that the 'stability of the verdict is still in play' and acknowledging that Storm’s 'incentives have shifted tremendously' before denying the motion.

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 great promise, it should not be an excuse for criminality, and that those who exploit new technology for old crimes undermine public trust. Clayton concluded by stating, “This Office and our partner agencies are committed to holding accountable those who exploit emerging technologies to commit crime.” Notably, Clayton’s statement did not acknowledge Deputy Attorney General Todd Blanche’s memo regarding the DoJ’s intention to stop 'regulation by prosecution' in the crypto space, nor did he mention that the vast majority of funds moved through Tornado Cash users were not proven to have been obtained illicitly.