Why US vs Storm (Tornado) is a huge case for crypto privacy developers

The upcoming trial of Roman Storm, co-founder of Tornado Cash, has sent ripples through the cryptocurrency world. With the case scheduled for December, many in the crypto community are raising alarms about the potential consequences for privacy developers. 

The outcome of U.S. vs. Storm may not only define the future of decentralized finance (DeFi) regulations but also set new standards for privacy tool developers, who could be held accountable for how their technology is used.

Judge Polk Failla rejects Storm’s dismissal motion

Tornado Cash was designed to enhance privacy for Ethereum transactions, allowing users to obscure their financial activities. However, U.S. prosecutors allege that the platform facilitated more than $1 billion in money laundering, including funds for North Korea’s Lazarus Group. Roman Storm faces charges of conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money-transmitting business. His legal defense emphasizes that he was merely a developer.

In August 2023, Storm’s defense had asked the court to drop all charges, arguing that code writing should be protected under the First Amendment, claiming the prosecution’s allegations infringed on free speech. 

However, in the last telephonic hearing on Thursday, New York Judge Katherine Polk Failla ruled that code writing may not necessarily be considered protected free speech and maintained that Storm’s charges are not exclusively based on his code writing, hence scheduling a trial for December.

She said:

At this stage in the case, this court cannot simply accept Mr. Storm’s narrative that he is being prosecuted merely for writing code. If the jury ultimately accepts this narrative, then it will acquit. But there’s no basis for me to decide that as a matter of law.

~Judge Katherine Polk Failla

On Thursday, Judge Failla denied Roman Storm’s request for a dismissal, arguing that the government had offered the court adequate evidence to advance the case. 

Storm is thus looking at about 45 years in prison if found guilty of conspiracy to commit money laundering, violating the International Emergency Economic Powers Act, and operating an unlicensed money-transmitting business. 

Crypto developers and enthusiasts voice concerns over US vs Storm case

Amanda Tuminelli, Chief Legal Officer at DeFi Education Fund, voiced her disapproval of the court ruling, pointing out her disagreement with the court’s decision to side with the government’s claim that control is not a necessary component of a 1960 offense, and how they had no intention of reading into it. 

She also noted in her list of objections the court’s statement that the government did not need to establish Storm colluded with users or understood the specifics of the illicit conduct; it just needed to show that he was aware he was dealing with the proceeds of some crime.

She added that the trial could have serious implications for Storm and software developers in multiple industries, urging people to donate to Roman’s defense fund.

Crypto Youtuber Professor Crypto also commented on how Storm could be jailed for about 45 years if he was convicted on all charges. He said Judge Failla was not’ cutting him any slack’ because the government made plausible allegations. He even jokingly remarked that the crypto dev life was not meant for the weak-hearted.

Jake Chervinsky, Variant Chief Legal Officer, called Judge Failla’s denial of Roman’s dismissal request an attack on the freedom of software developers worldwide, tagging it a ‘perversion of law and a travesty of justice.’

In another post, he cautioned all tech developers, stating that the government’s attempt to control would span more industries like over AI models and whatever else they believe threatens state power other than crypto.

Larry Florio, securities and funds lawyer, referred to the court case as the government’s criminal action against Tornado Cash’s founders, saying it could impact all tech corporations.

The crypto community is watching closely as Storm’s trial approaches. Privacy tools are a foundational part of the DeFi ecosystem, and the outcome could redefine how privacy is treated in blockchain development and signal a potential crackdown on decentralized technologies.

Cryptopolitan reporting by Nellius Irene