Quick Summary
- Roman Storm, a Tornado Cash developer, has questioned the open-source community about concerns regarding retroactive prosecution by the U.S. Department of Justice (DOJ) for developing decentralized finance (DeFi) platforms.
- Storm was partially convicted in August for operating an unlicensed money transmission business, a verdict that has raised significant concerns among open-source developers and the crypto community.
- The DOJ has indicated it will not retry deadlocked charges against Storm and does not intend to prosecute individuals solely for writing code without illicit intent.
- Legal experts and community members are debating the implications of the verdict on privacy-focused software development and future regulatory approaches in the crypto space.
Developer Roman Storm, associated with the privacy-preserving protocol Tornado Cash, has prompted a discussion within the open-source software community regarding potential retroactive prosecution by the U.S. Department of Justice (DOJ). Storm raised pertinent questions about the security of developers building decentralized finance (DeFi) platforms, particularly concerning charges typically applied to custodial services.
💡 This inquiry highlights a critical tension between the decentralized nature of many crypto projects and existing regulatory frameworks.
Storm directly addressed DeFi developers, asking, “How can you be so sure you won’t be charged by the DOJ as a money service business for building a non-custodial protocol?” He proposed that the DOJ might pursue cases by arguing that decentralized, non-custodial services should have been developed as custodial ones, referencing his own legal situation.
✅ Storm’s legal defense, detailed in his recent motion for acquittal filed on September 30, emphasizes the uncontrollable and decentralized nature of the Tornado Cash protocol.
Quoted within the acquittal documents, Storm stated, “Our company does not have any ability to affect any change, or take any action, with respect to the Tornado Cash protocol — it is a decentralized software protocol that no one entity or actor can control.”
📌 This defense underscores the core argument that developers of open-source, decentralized protocols lack the control necessary to implement compliance measures typically expected of traditional financial institutions.
In August, Storm was convicted on one of three charges. The jury found him guilty of conspiracy to operate an unlicensed money transmission business. This verdict has been described as potentially setting a dangerous legal precedent for open-source software developers and has sent ripples of concern throughout the cryptocurrency community.
⚡ The implications of this conviction are being closely watched, as it may influence how open-source development in the crypto space is regulated moving forward.
The Fight for Privacy Continues
Following the verdict, legal experts engaged in discussions about whether U.S. prosecutors would pursue the remaining money laundering and sanctions charges against Storm in a separate trial. The jury had been deadlocked during deliberations on these counts, failing to reach a unanimous decision.
📊 Understanding jury dynamics and prosecutorial discretion is key in assessing the future of such cases.
Jake Chervinsky, chief legal officer at Variant Fund, commented on X at the time, stating, “If the Trump administration wants the USA to be the crypto capital of the world, then the DOJ must not be allowed to retry the two deadlocked charges.”
💡 This sentiment reflects a broader concern that aggressive prosecution could stifle innovation and deter investment in the U.S. crypto sector.
Matthew Galeotti, the acting assistant attorney general for the DOJ’s criminal division, indicated in August that the DOJ would not initiate a retrial of Storm on the deadlocked charges, nor would they pursue similar cases against other developers based solely on code creation.
✅ Galeotti’s statements suggest a departmental stance focused on actions rather than mere development of open-source software.
Galeotti told attendees at the American Innovation Project Summit that, “Our view is that merely writing code, without ill intent, is not a crime.” He further elaborated, “The department will not use indictments as a law-making tool. The department should not leave innovators guessing as to what could lead to criminal prosecution.”
📌 This assurance aims to provide clarity for innovators, although the specifics of ill intent and actions remain areas of ongoing legal interpretation.
Fundfa Insight
The case of Roman Storm and Tornado Cash highlights the evolving legal landscape surrounding decentralized technologies. While the DOJ has offered assurances against prosecuting mere code creation, the conviction on unlicensed money transmission charges underscores the need for developers and the broader crypto community to remain informed about regulatory developments and to engage proactively in shaping future policies.