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Jury returns partial guilty verdict for Tornado Cash co-founder; crypto industry dismayed

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Jury returns partial guilty verdict for Tornado Cash co-founder; crypto industry dismayed

A US jury found Tornado Cash developer Roman Storm guilty of conspiracy to operate an unlicensed money-transmitting business, Inner City Press reports.

The jury could not reach a unanimous verdict on the money-laundering and sanctions charges. The US Department of Justice may bring a new trial on those counts.

What legal advocates say

Lawyers say the verdict poses risks for the entire decentralised-finance industry. They argue that a broad reading of the money-transmitter statute creates a precedent that authorities could use against other DeFi protocols.

“The problem is that many in the segment are concerned. They fear that the law could be applied to them just as it was to Tornado Cash,” said lawyer Aaron Brogan in a comment to Cointelegraph.

Variant Fund’s chief legal officer, Jake Chervinsky, called the verdict “a sad day for DeFi”.

He warned that the statute used by prosecutors poses an “existential threat” to decentralised applications.

Lawyer Zack Shapiro agreed with the “dismal conclusion” but noted a positive point: for now, Storm does not face “draconian” prison terms on the money-laundering charges.

The Justice Department will decide in the coming days whether to retry the money-laundering and sanctions counts. In Chervinsky’s view, choosing not to seek a retrial would be a positive signal for the US crypto industry.

Samson Enzer, a partner at law firm CahillNXT, believes the split verdict points to a weak evidentiary record by the government. In his view, prosecutors failed to prove that Storm knowingly helped criminals launder money through Tornado Cash.

Enzer also considers a retrial on the unresolved counts unlikely.

He said the case will have serious consequences for the crypto industry. It raises the question of whether developers of non-custodial protocols must comply with AML/KYC rules.

Industry reaction

Industry figures criticised the decision and called it a dangerous precedent for open-source software developers.

“We are disappointed that the jury did not recognise that Storm should not be held responsible for the actions of third parties whom he could not control,” the DeFi Education Fund said.

Coin Center’s executive director, Peter Van Valkenburgh, called the money-transmission charge “misplaced”.

He added that the decision is subject to appeal, and the organisation will do everything possible to support it. The Blockchain Association also urged him to appeal.

Journalist Eleanor Terrett reported that Storm plans to contest the charge.

In July, lawyers for the Tornado Cash developer said they intended to file a motion to have the proceedings declared invalid.

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