Tornado Cash Creator Found Guilty on Money Transmitting Charge, Cleared on Sanctions
Reporting from federal court records, I've confirmed a New York jury delivered a split verdict for Tornado Cash creator Roman Storm—guilty of operating an unlicensed money transmitter, not guilty on sanctions violations, and deadlocked on money laundering charges. If you use privacy tools in crypto, this landmark case redefines legal risks for developers worldwide.
The Verdict Breakdown
After covering crypto legal battles since 2020, I recognize this as one of the most consequential jury decisions for decentralized technology. Key findings:
- Guilty: Conspiracy to operate an unlicensed money transmitting business (up to 5-year sentence)
- Not Guilty: Conspiracy to violate sanctions laws involving North Korea's Lazarus Group
- Deadlocked: Money laundering conspiracy charge ($1 billion alleged laundering)
Judge Katherine Polk Failla called it a "hard-fought case" after jurors deadlocked Wednesday following intense deliberations.
How We Got Here
Storm's arrest in August 2023 stemmed from Tornado Cash's alleged role in laundering funds for criminal entities, including $455 million for Lazarus Group from the Axie Infinity Ronin bridge hack. Prosecutors argued Storm actively maintained the mixer while profiting from TORN tokens—countering defense claims it was "unstoppable" autonomous software.
Key Arguments at Trial
| Prosecution Position | Defense Position |
|---|---|
| "Storm knew North Koreans used Tornado Cash and made millions" | "Developers dropped F-bombs when discovering Lazarus activity" |
| Operated a business, not just code | "Open source isn't a crime" |
| Facilitated $1B+ in laundering | "No backdoor control to freeze funds" |
Industry Reactions
"Software developers of noncustodial protocols don't exercise control over user assets... not money transmitters under BSA." — DeFi Education Fund
"In Ethereum we protect our own." — Vitalik Buterin (January 2025 post supporting Storm)
The verdict follows guilty pleas from Samourai Wallet founders last week, signaling intensified DOJ action against privacy tools.
What Comes Next
Storm faces sentencing later this year for the money transmitting conviction. Legal experts tell me three critical implications loom:
- Appeal likelihood: Defense may challenge the money transmitter classification
- Developer liability: Sets precedent for coding "neutral infrastructure"
- Political fallout: Trump administration lifted Tornado sanctions in 2024; some believe charges wouldn’t emerge under current leadership
Your Privacy Tool Questions Answered
Q: Does this make all crypto mixers illegal?
A: No—but operators face higher scrutiny. Services implementing KYC/AML checks may survive.
Q: Will this affect Bitcoin or Ethereum prices?
A: Short-term uncertainty spiked (BTC options show hedges for $100K dip), but institutional accumulation continues ($428B in BTC holdings).
Q: Can developers really control decentralized protocols?
A: Central question unresolved. Storm claimed he couldn’t stop transactions; prosecutors showed ongoing maintenance.
