The crypto world is reeling from the recent conviction of Roman Storm, co-founder of the privacy mixer Tornado Cash. This landmark verdict, finding him guilty of operating an unlicensed money-transmitting business, sends a chilling message across the decentralized finance (DeFi) landscape. It sparks widespread debate and concern regarding developer liability in the digital asset space.
Landmark Conviction and DOJ's Stance
Following a four-week trial, a jury found Roman Storm guilty of operating an unlicensed money transmitter, leading to a five-year sentence. The Department of Justice (DoJ) asserted that Storm and his co-founders reaped over $12 million in profits. This profit was largely from facilitating over $1 billion in illicit money transfers, notably from North Korean hackers who utilized Tornado Cash to launder stolen crypto, including the massive Axie Infinity hack. U.S. Attorney Jay Clayton lauded the conviction, emphasizing that the promise of digital assets "cannot be an excuse for criminality." While Storm faced additional charges of money laundering and sanctions violations, these remain unresolved, with the DoJ potentially pursuing them further.
Industry Backlash and Calls for Appeal
The verdict has ignited significant controversy within the crypto community, with prominent legal experts and advocacy groups decrying it as a "sad day for DeFi." Critics, including Jake Chervinsky from Variant Fund and organizations like Coin Center and the DeFi Education Fund, argue strongly that the unlicensed money transmitter charges under Section 1960 should not apply. They contend it should not apply to a developer of a non-custodial protocol who lacks control over user funds. They further argue that Storm had no direct control over third-party actions on Tornado Cash and that this case sets a dangerous precedent for the broader industry. Consequently, there are widespread calls for Roman Storm to appeal the ruling, with legal support pledged from various crypto advocacy groups.
