Ethereum Foundation Backs Tornado Cash Dev with $1M After Guilty Verdict—Defiance or Decentralization?

The crypto world erupts as the Ethereum Foundation throws a $1 million lifeline to Tornado Cash developer Roman Storm post-conviction. Privacy tech or money laundering 2.0? Regulators aren’t laughing.

The $1M Question: Funding Rebellion or Fueling Crime?

While Wall Street fines itself for lunch-money violations, the Ethereum Foundation’s move screams defiance—or recklessness. Storm’s verdict? Guilty. The foundation’s response? A cool million in support. Decentralization’s moral compass just got murkier.

Privacy vs. Prosecution: The Eternal Crypto Tug-of-War

Tornado Cash’s mixer tech promised anonymity. Regulators saw red flags. Now, with Storm’s legal battle escalating, the Ethereum Foundation’s cash injection reads like a middle finger to compliance. ‘Code is law’—until it’s not.

Cynical Finance Jab:
Meanwhile, traditional banks launder billions annually and settle for ‘cost of doing business’ wrist slaps. But hey, at least they file paperwork.

Tornado Cash and its legal woes

Tornado Cash is a decentralized privacy protocol built on Ethereum, which uses smart contracts to break the on-chain LINK between sender and recipient, allowing users to make private transactions without relying on a central party. The project launched in 2019 and operates entirely on open-source code, with no admin controls or intermediaries.

But in 2022, U.S. authorities dropped a lengthy list of charges against the project, alleging that it facilitated millions in illegal transactions and money laundering.

Tornado Cash is not the only tool built around crypto privacy. Projects like Monero (XMR) and Zcash (ZEC) also use similar privacy-focused tools to anonymize transactions. Monero uses stealth addresses and ring signatures to keep senders and receivers hidden by default, while Zcash offers optional privacy using zero-knowledge proofs.

What makes the protocol different is how it operates completely autonomously, which prosecutors say has made it the go-to among sanctioned entities like North Korea’s Lazarus Group. Per the DOJ, more than $7 billion in illegal funds have been laundered via Tornado Cash by North Korean hackers.

The year-long legal battle culminated in a trial, where Storm was recently found guilty on one of the charges against him.

Roman Storm’s trial ends with partial conviction

Storm was recently found guilty by a Manhattan jury of operating an unlicensed money transmitter, following a multi-week trial in his case with the U.S. Department of Justice.

While damning, the ruling marks a partial win for the co-founder. The jury failed to convict him on the more severe charges of money laundering and sanctions violations, which prosecutors were pushing for based on claims that Storm knowingly helped North Korea’s Lazarus Group launder funds through Tornado Cash.

Jurors were unconvinced that simply writing and deploying open-source code amounted to criminal conspiracy, delivering a blow to the DOJ’s attempt to secure a penalty of up to 45 years behind bars.

For now, Storm remains out on bond as he prepares to appeal. However, the DOJ has left the door open to retry him on the unresolved counts, and it remains to be seen whether the co-founder will manage to stay out of prison in the long run.

Meanwhile, Storm’s co-developer, Alexey Pertsev, was convicted of similar charges last year and sentenced to 64 months in prison in the Netherlands. Pertsev was released earlier this year, though he remains under monitoring. The third Tornado Cash co-founder, Roman Semenov, is also charged but remains at large.

Storm and his co-developers have often reiterated their innocence, saying that the protocol was built to protect user privacy, and once it was deployed, it operated autonomously and outside of their control.

Prominent voices in the crypto community, including Ethereum co-founder Vitalik Buterin, have echoed that stance. As a longtime advocate for digital privacy, Buterin has defended the team’s right to build open-source tools without fear of prosecution.

“Privacy is normal, and writing code is not a crime,” the Ethereum co-founder has often said, stressing that the first step is embracing this is “sending a clear signal to developers that this important work is welcome.”