- Ethereum Foundation pledges to match up to $500K for Tornado Cash co-founder Roman Storm’s legal defense.
- Storm convicted of unlicensed money transmission; faces up to 5 years if appeal fails, with other charges pending.
- The case sparks fears of criminalizing open-source development, with lawyers warning of a major precedent for DeFi and privacy tools.
The Ethereum Foundation has pledged to match up to an additional $500,000 in donations to aid the legal defense of Tornado Cash co-founder Roman Storm.
The promise, made on Thursday, follows last week’s guilty verdict on one of three federal counts against Storm, with many within the crypto community alarmed by the case’s implications for the future of open-source development.
“Privacy is the norm, and coding is not a crime,” tweeted Wei Wang, Ethereum Foundation co-executive director, highlighting the organization’s stance on the issue.
It comes after Wednesday’s guilty verdict by a Manhattan jury, which convicted Storm of conspiring to run an unlicensed money transmitter. The jurors, however, could not agree on other conspiracy charges of money laundering and evading sanctions; thus, those counts remain unresolved after four days of deliberations.
Ethereum and Tornado Cash Trial Raise Fears for Code Developers
Storm will face up to five years in jail if he loses the appeal, and potentially decades more if the prosecutors decide to retry the other two unresolved counts, the Free Pertsev & Storm legal aid group said. The group noted the case will “set a big precedent for developers worldwide” with the possibility of criminalizing the action of developing the software.
Storm’s legal fight stems from helping to develop Tornado Cash, a blockchain privacy tool that blends cryptocurrency transactions to hide where they came from or where they’re headed.
The US Treasury sanctioned Tornado Cash in August 2022, saying it conducted more than $7 billion worth of unlawful transactions since 2019, including routine use by the North Korean state-sponsored Lazarus Group hackers.
US federal prosecutors characterized Tornado as an entity that made money out of “obscuring dirty money on behalf of criminals,” whereas the defense argued that Tornado Cash was an unbiased anonymization tool built for rightful users, rather than a tool specifically created for criminal purposes.
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Ethereum Faces DeFi Legal Backlash
Crypto lawyer Jake Chervinsky seconded those concerns, calling the ruling “a sad day for DeFi” and arguing that “Section 1960 shouldn’t apply to the developer of a non-custodial protocol who has no access to users’ funds.” His expectation was for the Second Circuit Court of Appeals to reverse the ruling.
The costs of the trial have been high. Storm issued a public appeal for a further $1.5 million in legal funding last July, saying costs were building up quickly throughout the three-week court fight.
It comes as cryptocurrency privacy solutions are also under increased scrutiny. Just this week, the founders of Samourai Wallet, William Lonergan Hill and Keonne Rodriguez, pleaded guilty to conspiring to run an unlicensed money transmitter.
Prosecutors accused the cryptocurrency-mixing platform of money laundering of over $100 million, referring to it as a “sanctions evasion and large-scale money laundering haven.” The couple now faces sentencing on November 6, with both of them potentially spending up to five years in jail.
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