Tornado Cash Co-Founder Roman Storm Found Guilty – Unlicensed Money Transmitter Case Rocks Crypto Privacy
Privacy tech meets prison time. Tornado Cash's Roman Storm just became the crypto world's newest cautionary tale—convicted for operating an unlicensed money transmitter. The verdict lands like a sledgehammer on decentralized finance's gray areas.
When code isn't enough
The prosecution painted Storm's privacy protocol as a neon sign for laundered funds. Never mind that Tornado Cash merely automated what mixers have done for decades—regulators see blockchain's traceability as a feature, not a bug.
The compliance paradox
Financial watchdogs keep demanding crypto 'play by the rules' while refusing to define them clearly. Meanwhile, traditional banks move dirty money by the billions—but hey, at least they file paperwork.
Storm's conviction sets precedent. Privacy coins just got riskier, compliance tech just got more valuable, and crypto's regulatory reckoning just got real. The irony? This might finally push decentralized projects to hire lobbyists—the most centralized solution of all.
Roman Storm found guilty of operating unlicensed money transmitter
Tornado Cash co-founder Roman Storm was found guilty of operating an unlicensed money transmitter by a Manhattan court on Wednesday.
Storm was convicted under "18 U.S.C. § 1960," a federal statute that criminalizes operating an unlicensed money-transmitting business.
The Tornado Cash co-founder also stood trial for charges of money laundering and sanctions violations. However, the jury failed to reach a verdict on the other allegations, which led to an adjournment of the case.
Judge Katherine Polk Failla, who presided over the trial in the Southern District of New York, reportedly stated that "there is a lot of fighting left in this case before sentencing."
Prosecutors accused Storm of allowing bad actors, such as the North Korea Lazarus Group, to carry out illicit activity on Tornado Cash. However, members of Storm's legal team, including David Patton and Brian Klein, pushed back the claim, citing his non-involvement in the platform's activities.
Storm also called the development "a big win," stating that he will continue to fight in the case. "You know how President Trump said 'fight, fight, fight'? We'll do that too," Storm told crypto in America's Eleanor Terret.
Prosecutors also requested that Storm be taken into custody, arguing he is a flight risk due to his conviction, Patton noted in an X post on Wednesday. Judge Failla denied the motion, meaning Storm will be free on bail pending an appeal to the court and a final sentence.
Storm was charged in 2023 with facilitating over $1 billion in illicit crypto transactions, including funds tied to North Korea's sanctioned Lazarus Group. He was also accused of running an unlicensed money transmitter and violating sanctions laws.
The development has garnered the attention of crypto industry members and organizations, including DeFi Education Fund, which stated their support for Storm, pushing back at the court's decision.
"The government's case targeting a software developer should have never been brought in the first place and remains fundamentally flawed," DeFi Education Fund stated in an X post on Wednesday.
The guilty verdict has also raised concerns about the effect of this case on DeFi and the regulatory safety of open-source developers like Storm.
"Verdict means all crypto DeFi and privacy developers are still at risk, probably increased risk as a result of the USC 1960 guilty precedent in this first court decision," Ryan Sean Adams of Bankless wrote on X.
"Not only does this verdict threaten the very act of open-source software development, it also fundamentally misapplies money transmitter laws," The Blockchain Association also highlighted on X.
With the current guilty verdict, Storm faces up to five years in prison. The number could rise to forty-five years if he is convicted of all charges.
