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Yahoo
6 days ago
- Business
- Yahoo
Shocking verdict out on Tornado Cash case
Shocking verdict out on Tornado Cash case originally appeared on TheStreet. A Manhattan jury found Tornado Cash co-founder Roman Storm guilty of conspiracy to operate an unlicensed money transmitting business in a split verdict on Aug. 6, the Inner City Press reported. However, there are still two charges on which they couldn't reach a verdict: money laundering and sanction violations. We will know in the next few days if the Department of Justice (DoJ) will pursue these charges in a new trial. Launched in 2019, Tornado Cash is an open-source, non-custodial, and fully decentralized cryptocurrency mixer that pools different crypto funds together so as to obscure the trail of the money flow. While the authorities have frequently criticized the service for concealing funds belonging to malicious actors, those championing Tornado Cash underline the value of privacy and individual freedom in on-chain witnesses from the prosecutor's side included officers belonging to the Federal Bureau of Investigation, the Internal Revenue Service, etc., and hackers, who argued that Storm was competent enough to modify the code to prevent Tornado Cash's misuse by bad actors, but he chose not to act. The defense's side put forth Ethereum core developer Preston Van Loon and NAXO co-founder Matthew Edman, among other experts, who testified in the developer's defense. Storm has been found convicted of the charge of unlicensed money transmitting, which carries a maximum sentence of up to five years in prison. 3 years ago... It was nearly three years ago on Aug. 8, 2022, that the Office of Foreign Assets Control (OFAC), a financial intelligence and enforcement agency of the Treasury Department, sanctioned Tornado Cash. It alleged that Lazarus Group, the notorious hacking group linked to North Korea, had used the service to launder stolen crypto assets worth $455 million. The mixer facilitated laundering of assets worth over $7 billion, the OFAC Nov. 20, 2024, a federal appeals court ruled that the Treasury had overstepped its authority while sanctioning the service. Smart contract-based services do not inherently violate laws, the court ruled. On March 21, 2025, the Treasury lifted sanctions against the crypto mixer. However, the case for which the verdict has just come out began on Aug. 23, 2023, when the DoJ charged Storm, along with another Tornado Cash co-founder Roman Semenov, for laundering funds worth more than $1 billion. Crypto community throws support behind Storm So far, Storm has argued that developers should be able to freely write code without fearing consequences due to misuse by any third parties. "If I lose, DeFi dies with me. The dream of financial freedom, the code I believed in—it all fades into darkness. I'm fighting, but the weight is unbearable," Storm wrote on X on June 13 as the trial loomed. The crypto industry has taken the same line of defense. In fact, the idea for Tornado Cash itself had come from Ethereum co-founder Vitalik Buterin himself, who had engaged in discussions around on-chain privacy with Storm. The crypto mixing service runs on Ethereum Virtual Machine-compatible has found support among the ranks of Buterin and the Ethereum Foundation. Supporters raised over $3 million to put up the legal defense. Needless to say, the latest verdict has shocked the crypto community. Bitwise's research analyst Danny Nelson called it "a disaster for DeFi developers." The crucial question still remains if a developer can really control the use of a code or a program by third parties and be held accountable for its misuse. Shocking verdict out on Tornado Cash case first appeared on TheStreet on Aug 6, 2025 This story was originally reported by TheStreet on Aug 6, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
WIRED
6 days ago
- Business
- WIRED
Tornado Cash Developer Roman Storm Guilty on One Count in Federal Crypto Case
Aug 6, 2025 2:27 PM A federal jury found crypto developer Roman Storm guilty of operating an unlicensed crypto business, but cleared him of sanctions violations and deadlocked on a money laundering charge. The facade of the Department of Justice building is seen in Washington, D.C. Photograph:Roman Storm, one of the developers of crypto anonymizing tool Tornado Cash, has been found guilty of conspiracy to operate an unlicensed money transmitting business by a jury in a court in New York. He faces a maximum sentence of five years in federal prison. In 2023, the US Department of Justice charged Storm with three violations: conspiracy to commit money laundering, conspiracy to violate sanctions, and conspiracy to operate an unlicensed money transmitting business. On Wednesday, at the end of a four-week trial and a deliberation period spanning five days, the jury returned a partial verdict: It found Storm guilty of operating an unlicensed money transmitting business, and not guilty of sanctions evasion. It failed to reach a unanimous verdict on the money laundering count, which carries a far greater penalty of up to 20 years in prison. 'We are grateful the jury did not convict Roman for violating sanctions or laundering money. There are serious legal issues with the sole remaining count involving unlicensed money transmission,' says Brian Klein, partner at law firm Waymaker, one of Storm's representatives at trial. 'We will not stop fighting for Roman and expect him to be fully vindicated.' Storm intends to file for the single conviction to be dismissed in a post-trial motion, his counsel tells WIRED. Tornado Cash was developed in 2019 by Storm and two others, Alexey Pertsev and Roman Semenov. The idea was to conceal the ownership of crypto coins, by pooling funds belonging to various different parties, then dishing them into brand-new wallets, thereby interrupting the public trail of transactions recorded on a blockchain. Services like Tornado Cash are marketed as essential to improving the level of privacy available to crypto owners. Privacy has long been a preoccupation among crypto ideologues, but the issue is especially pertinent at present, after a string of violent kidnappings targeting people known to possess large amounts of crypto. 'Privacy is a very pragmatic thing for basic safety,' Vitalik Buterin, co-creator of the Ethereum crypto network, told WIRED before the start of the trial. 'If someone knows who has the coins, someone knows who to target.' But the US government saw Tornado Cash differently—as a tailor-made vehicle for money laundering. When it brought charges in 2023, the DOJ argued that Storm had built and profited from a tool that allowed criminals to launder at least $1 billion in crypto, among them hackers with ties to North Korea. 'Claiming to offer the Tornado Cash service as a 'privacy service,' the defendants in fact knew that it was a haven for criminals to engage in large-scale money laundering and sanctions evasion,' the indictment alleged. At trial, prosecutors presented evidence that they claimed proved that Tornado Cash was designed for money laundering from the outset. Their witnesses included a scam victim whose stolen funds were said to have passed through Tornado Cash—though this account was contested online by prominent members of the crypto industry—and a convicted fraudster who used the service to launder ill-gotten gains. 'Washy, washy,' the fraudster supposedly wrote to his girlfriend, in a message about Tornado Cash. When the government closed its case last week, prosecutors dismissed the topic of privacy as a convenient distraction. 'The real money wasn't in so-called 'privacy' for normal people,' Benjamin Gianforti, one of the prosecutors, is quoted as saying. 'It was in hiding dirty money for criminals.' Storm and the other developers even took to wearing a Tornado Cash-branded t-shirt emblazoned with an image of a washing machine, prosecutors noted. Storm's attorneys, meanwhile, sought to argue that although their client had developed the technology exploited by bad actors, he had not engaged in any criminality himself, nor handled any dirty money. 'You'll never hear any evidence that Roman or the [other] co-founders participated in any hacks,' said Keri Curtis Axel, partner at law firm Waymaker and counsel to Storm, in her opening remarks. Storm was powerless to prevent the abuses of Tornado Cash, the defence reportedly argued, because he and the other developers had relinquished the ability to modify or disable the underlying code, in the spirit of decentralization. The defence called to the stand a number of witnesses that spoke to the potential legitimate uses for Tornado Cash. But Storm did not testify, which would have opened him up to cross-examination by the prosecution. Ultimately, despite finding Storm guilty of the lesser money transmitting violation, the jury proved receptive to the defense's line of reasoning. 'The jury split the proverbial baby,' says Mark Bini, partner at law firm Reed Smith's crypto practice and former federal prosecutor. 'While they likely credited the defense's compelling arguments that there are legitimate privacy uses for mixers and that Storm was not directly involved in any of the crimes in which Tornado Cash was used, they felt uncomfortable with the steps that Tornado Cash took or didn't take to prevent illicit uses.' Storm now awaits sentencing, which usually takes place a few months after a conviction. Meanwhile, the DOJ must decide whether to retry the money laundering count on which the jury could not agree. 'The government could choose to retry Storm on the hung count, but based on the notes that were coming back from the jury, I expect that they will go to sentencing based upon the conviction they secured,' says Bini. 'While they are likely to argue for a stiff sentence, the jury's verdict appears to take a lot of the sting out of the government's case.'
Yahoo
6 days ago
- Business
- Yahoo
BREAKING: Tornado Cash dev Storm guilty of money transmission — but jurors deadlocked on most severe charges
Jurors delivered a split verdict in the criminal trial of Roman Storm on Tuesday, finding the Tornado Cash co-founder guilty of conspiracy to operate an unlicensed money transmitting business. But they were unable to reach a verdict on two other charges: conspiracy to commit money laundering, and conspiracy to evade sanctions. While Storm dodges the most severe charges, the lone guilty verdict was nevertheless a loss for the crypto industry, which took particular umbrage with the charge the software engineer had conspired to operate an unlicensed money transmitting business. That charge does not accurately reflect the way Tornado Cash and many other crypto protocols operate, they say, and the verdict could chill the development of such software. Judge Katherine Polk Failla denied prosecutors request to detain Storm. Prosecutors argued Storm presented a flight risk, with ties to Russia and his ownership of an estimated $16 million in cryptocurrency. But Failla noted Storm's deep ties to the United States, including a daughter living in San Antonio, as well as the likelihood he would continue to contest the money transmission charge on appeal. 'Privacy is not a crime' The verdict caps a three-and-a-half week long courtroom drama. Storm, dressed in software developer formal — crisp button-down shirts, chinos, and dressy sneakers — sat impassive throughout. The cavernous courtroom in lower Manhattan was filled with a rotating cast of supporters and observers, including reporters, prominent crypto developers, industry lawyers, privacy advocates, summer interns at the US Attorney's Office, and staff from the DeFi Education Fund, a crypto advocacy firm. During the first week of the trial, Tim Clancy, an advisor to the Ethereum Foundation who had personally donated more than $100,000 to Storm's defence, arrived to show his support. He had brought a copy of 'PGP: Source Code and Internals,' a book by a software engineer who was investigated by US authorities in the 1990s after publishing the source code for an encryption protocol called Pretty Good Privacy. Clancy had spent $600 to buy the book, he told DL News, hoping to have Storm sign the copy so he could auction it — and then donate the proceeds to Storm's defence. 'We don't want him to be martyred,' Clancy said. The morning of July 30, with closing arguments moments away, a group of supporters stood outside the courthouse holding signs that read 'Privacy is not a crime,' 'Defend coding freedom,' and 'Free Roman Storm.' Tornado Cash tumult The verdict is also the culmination of three tumultuous years for Tornado Cash and its founders. The crypto mixer makes it difficult, if not impossible, to trace users' crypto transactions on Ethereum and several other blockchains. That has made the protocol popular with privacy-minded crypto users and cybercriminals alike. In March 2022, the chain of events that would lead to Storm's trial kicked off when hackers affiliated with North Korea stole about $600 million in crypto from the Robin bridge, software that connects the Ronin and Ethereum blockchains. The hackers proceeded to launder some $500 million of that through Tornado Cash, alarming the founders. For years, the pariah state has been subject to sanctions from the US and its allies for its long running effort to build a nuclear weapon. That effort is funded, in part, from the proceeds of its various cybercrimes. 'Shit might seriously hit the fucking fan now,' co-founder Roman Semenov wrote his colleagues that month, according to evidence presented at trial. He was right. In August 2022, the US sanctioned Tornado Cash, citing its use by hackers affiliated with Pyongyang. That month, Dutch authorities arrested co-founder Alexey Pertsev. A three-judge panel found him guilty of money laundering in 2024 and sentenced him to more than five years in prison. He is currently appealing his conviction. NOW READ: In 2023, the US charged Storm and Semenov, and arrested Storm at his home in the Seattle suburbs. The US Treasury Department also sanctioned Semenov, who is still at-large. But the industry fought back. Bankrolled by crypto exchange Coinbase, six Tornado Cash users successfully sued the Treasury Department in 2022, arguing that sanctioning a mere tool such as Tornado Cash was an unprecedented — and unconstitutional — overreach. In March 2025, the Treasury Department removed Tornado Cash from its sanctions list. A month later, a district court ruled the agency could not re-sanction the protocol. It was a massive victory for the industry. Storm's attorneys quickly asked the court to reconsider dismissing the government's charges against him. But Judge Failla rejected their request. While an appellate court found the Treasury Department could not sanction Tornado Cash's 'immutable smart contracts' because they are 'not capable of being owned,' Storm's alleged crimes involved other aspects of the protocol, Failla said. Road to Storm's trial Federal prosecutors trumpeted Storm's arrest in August 2022. 'While publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes,' then-US Attorney Damian Williams said in a statement. Storm immediately began to raise money for his defence. He would eventually raise more than $4.7 million. Donors included Ethereum co-founder Vitalik Buterin and crypto venture capital firm Paradigm. 'You created Tornado in significant part because of my suggestion that it is something worth building,' Buterin wrote on X. 'It would violate basic honour for me to do that, and then fail to support you in your hour of need.' Storm retained a team led by defence attorney Brian Klein, of Los Angeles-based Waymaker. Klein has defended several high-profile crypto clients, including US crypto exchange Kraken. In May, he convinced a federal judge in New York to vacate a guilty verdict against Mango Markets exploiter Avraham Eisenberg. Storm's attorneys argued Tornado Cash runs on self-executing software developers cannot change, upgrade, or control — in other words, that he had no hand in what may have happened on the platform. As such, he's really being prosecuted for writing the code, they argued. 'It is well established that computer code is speech the First Amendment protects,' Storm's attorneys wrote in a 2023 letter asking Failla to dismiss the case. 'Yet, all three counts here seek to criminalise the development and publication of code and the maintenance of a website that provided open-source software.' Moreover, guidance from the Treasury Department's Financial Crimes Enforcement Network, or FinCEN, suggested that the agency didn't consider Tornado Cash a money transmitter, the attorneys said. At a hearing last September, however, Failla denied Storm's request that she dismiss the case. She expressed deep skepticism of the notion that writing and then deploying the Tornado Cash protocol was protected by the First Amendment. She also shot down Storm's other arguments for dismissing the case before trial. Control over the protocol was 'not a necessary requirement' for the money laundering charge, she said. Nor was his direct participation in the 'underlying criminal activity.' And Tornado Cash is 'not meaningfully different' from crypto mixers recognised as money transmitting businesses in earlier court cases, the judge added. 'This court cannot simply accept Mr. Storm's narrative that he is being prosecuted merely for writing code,' she said. 'For starters, that's an overstatement of what's actually charged in the indictment. What is more, if the jury ultimately accepts his narrative, then it will acquit.' On the eve of the trial, Failla barred either side from raising the First Amendment, FinCEN, or the Tornado Cash sanctions in front of jurors, according to a report from The Rage. The trial Storm's trial began in earnest on July 15 in a courtroom in lower Manhattan. The 12 jurors skewed young and well-educated — 10 were younger than 50, and five were younger than 30. Nine had college degrees. Seven were women, and five were men. During opening arguments, prosecutors said that Storm ran 'and profited from a giant washing machine for dirty money — and he knew it.' Defence attorney Keri Axel, in turn, said Tornado Cash is a 'legitimate software project backed by US investors,' adding that most of its users were normal people seeking privacy on Ethereum. 'How would you feel if someone took your bank account and published it on the internet?' she said. 'You would not feel very safe.' Over the next two and a half weeks, jurors heard testimony from more than a dozen government witnesses, including 23-year-old Andre Llacuna, one of the people behind a $1.1 million NFT scam. After running off with investors' crypto, Llacuna and his partners turned to Tornado Cash, he told jurors. 'It seemed like the best option for us to hide the money and get away with it,' Llacuna said. Philip Werlau, a senior investigator at blockchain analytics firm testified that aspects of the Tornado Cash protocol could have been changed by Storm and his co-founders. Specifically, the protocol's so-called relay system had code that could have been changed to deter money laundering, Werlau said. Moreover, about 99% of all deposits to the mixer relied on the relay system. Tornado Cash founders did take steps to limit money laundering, he acknowledged. But those measures were easily circumvented. Most controversial of all was the testimony from Hanfeng Lin, a Taiwanese woman living in Georgia who was scammed out of tens of thousands of dollars in crypto. Lin recounted falling for a so-called pig butchering scam in 2021. A 'crypto recovery service' she hired in 2022 told her some of the stolen crypto was laundered through Tornado Cash. NOW READ: But Storm's attorneys, as well as prominent blockchain forensic experts, said they couldn't corroborate that claim. '[Prosecutors] called a very sympathetic alleged victim who, from our research over the weekend, we can't find a connection between her funds and Tornado Cash,' defence attorney David Patton said. Without that connection, Lin had 'utterly no relevance' to the case, Patton said before threatening to move for a mistrial. An agent for the Internal Revenue Service later testified he had also traced Lin's crypto to Tornado Cash, though defence attorneys said his methods were dubious. Prosecutors also presented a raft of private messages obtained from Pertsev's phone, some of them damning. In one exchange in which the co-founders discussed an upgrade to the relay system, they appeared to acknowledge they did, in fact, have meaningful control over Tornado Cash. 'The protocol seems immutable, but everyone must use the proxy,' Semenov said in February 2022, according to a government translation of a voice message he sent his co-founders. 'We kind of took back power this way. This could somehow highlight re-centralisation,' he said. 'Show me a DeFi project which has true decentralisation. Let's take a look at how many projects have centralised potential points like ours,' Storm said in the chat later that day. 'The concerns are no doubt valid, but that's no reason not to do correct updates.' There were battles outside jurors' earshot as well. At one point, the defence appeared to suggest prosecutors were attempting to intimidate its witnesses. Those witnesses had been ready to testify about their involvement with Tornado Cash — until they were contacted by prosecutors mid-trial, according to defence attorneys. After the contact, both witnesses said they might invoke their Fifth Amendment right to remain silent if called to testify, defence attorneys said, appearing to imply the government had threatened prosecution if the witnesses spoke. Prosecutors acknowledged they were considering bringing charges against executives at Tornado Cash investor Dragonfly, according to news reports, though those comments were later walked back. Dragonfly Managing Partner Haseeb Qureshi called it 'outrageous.' 'We believe the government's statement in court today was primarily to undermine a defence of Tornado Cash — to make it more difficult for the defense to call [Dragonfly Managing Partner Tom Schmidt] to testify on the stand,' Qureshi said. Neither witness ultimately testified. It wasn't the only legal skirmish — early in the trial, prosecutors asked the judge to forbid any talk of privacy from anyone other than Storm himself. That could have moved sympathetic jurors to acquit Storm even if they thought he was guilty, prosecutors said. Failla rejected the request. But Storm's attorneys and witnesses could not refer to a 'right to privacy,' the judge ruled. Nor could they discuss 'inflammatory' incidents such as the kidnapping of crypto investors and executives, which have been on the rise in 2025 and forced industry players to strengthen their security. 'There will be plenty of less inflammatory evidence in the record suggesting a need for privacy in cryptocurrency transactions,' the judge said. When the defense made its case, it called Tornado Cash users who testified they had used the protocol to protect their privacy. 'I didn't want the public to know where my investments are,' Columbia University adjunct professor Omid Malekan said. 'I didn't want to put a bull's-eye on my back,' he continued, before a prosecutor objected to the statement, which implied physical danger — apparently the kind of 'inflammatory' testimony the judge had forbidden. 'The jury will disregard that last answer,' Failla said, turning to the defence. 'Counsel, if you cannot control your witness, he will come right off the stand.' The defence also called experts in an attempt to rebut Werlau's testimony. Cryptography expert Matt Edman testified there was little that Storm could have done to limit money laundering on Tornado Cash. Any updates to limit money laundering could easily be circumvented by using older versions of the Tornado Cash website stored on the InterPlantery File System, he said — something at least one hacker seems to have done. During closing arguments, Patton, a defence attorney, said Storm built the protocol to solve a pressing issue in the crypto industry: the fact that every blockchain transaction and account can be viewed by anyone with internet access and a little know-how, exposing well-heeled users to scams and hacks. Dragonfly's $900,000 investment and significant interest from Andreessen Horowitz, another venture capital firm, suggest that Tornado Cash was regarded as a legal product that could appeal to regular people, according to Patton. 'The government has this completely, utterly wrong,' he said. 'He didn't want [scammers] to use Tornado Cash. He did not have a financial interest in them using Tornado Cash.' Prosecutor Benjamin Gianforti told jurors the trial had given them a 'front-row seat to the dark underbelly of global financial crime.' 'What do these criminals need to get away with their crimes?' he continued. 'A way to make that dirty money clean.' And he rejected claims the Tornado Cash founders were powerless to stop money laundering on the platform. 'For Tornado Cash, decentralisation was the big lie,' Gianforti said. He also appeared to dismiss the notion that privacy-enhancing technology could have a non-criminal purpose. 'Isn't anonymity just another word for concealment?' he said. 'Remember, when the defence says 'privacy,' what they really mean is 'hiding money for criminals.'' Aleks Gilbert is DL News' New York-based DeFi correspondent. You can reach him at aleks@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Russia Today
12-07-2025
- Business
- Russia Today
Russian crypto engineer detained in US asks Trump for pardon
A Russian crypto entrepreneur incarcerated in the US has appealed to President Donald Trump for a pardon, a human rights advocate has told RT. Anatoly Legkodymov, who has already served a sentence in the US for operating an unlicensed money-transmitting business, is now facing extradition to France to stand trial on the same charges. Legkodymov, the founder and majority owner of cryptocurrency exchange Bitzlato, was arrested in Miami in January 2023 by the US Justice Department. It accused him of running a platform that facilitated more than $700 million in proceeds from illegal gambling and drug transactions. The DOJ said Bitzlato failed to implement basic money laundering safeguards. In December 2023, Legkodymov, a Russian national and resident of Shenzhen, China, pleaded guilty to the charges, and in July 2024, a US court sentenced him to the 18 months he had already served. At the time, the judge noted that the harsh detention conditions were a factor in not imposing a longer term. Prosecutors sought at least four years, arguing that he 'created a clearinghouse for dirty money.' He was supposed to be deported to Russia after being released, but the US authorities blocked the move after receiving an extradition request from France, where he is facing up to 20 years for the same charges. Commenting on the situation, Ivan Melnikov, the vice president of the Russian branch of the International Committee for the Protection of Human Rights, told RT that Legkodymov's decision to seek a presidential pardon was driven by concerns over double jeopardy. Melnikov noted that being prosecuted twice for the same activities 'violates all legal norms.' He argued that Legkodymov 'is not a criminal,' but got caught up in a 'political campaign against the crypto market and talented Russian programmers.' According to Melnikov, hopes for clemency are buoyed by changing US attitudes towards the cryptomarket, illustrated by Trump's recent decision to pardon Ross Ulbricht, the creator of the Silk Road dark web marketplace, as well as several BitMEX cryptocurrency exchange executives. 'There is hope for a return to a more balanced and fair approach to digital finance and for gradually improving dialogue between the US and Russia,' Melnikov said. During Trump's current term, Washington and Moscow have completed several prisoner exchanges. Last month, the Russian Embassy in the US said it is monitoring the Legkodymov case, and that he must be returned to his homeland.
