The recent prosecution of Roman Storm, co-founder of Tornado Cash, has sparked a heated debate about the criminalization of privacy in the crypto space. Storm, who developed the open-source code for Tornado Cash, a non-custodial privacy protocol for crypto transactions, is facing charges of operating an unlicensed money-transmitting business, conspiracy to commit money laundering, and sanctions evasion.
In a post on Jan. 22, Storm expressed his concerns about the implications of his prosecution, stating that the charges against him could set a dangerous precedent for software developers. He emphasized that the code he wrote enables private crypto transactions in a non-custodial manner and should not be criminalized.
The impact of Storm’s case is already being felt in the crypto community. Another developer, Michael Lewellen, has filed a lawsuit against the Department of Justice, citing fears of releasing new software in light of Storm’s prosecution. The lawsuit addresses the same reasoning used by the DOJ to prosecute the developers of Tornado Cash and Samourai Wallet, raising concerns about the potential criminalization of software development.
In a significant legal development, the Fifth Circuit Court of Appeals ordered the US Treasury’s Office of Foreign Assets Control to remove Tornado Cash-linked addresses from its SDN list. The court’s ruling highlighted the autonomous nature of smart contracts and suggested updating legislation to regulate crypto-mixers without restricting applications like Tornado Cash.
Following this legal win, Storm filed a motion on Dec. 20 to dismiss the criminal charges against him. The support from Ethereum co-founder Vitalik Buterin has also been crucial in rallying support for Storm and his fellow developer Alexey Pertsev. Buterin emphasized the importance of upholding honor and protecting developers like Storm who contribute to the Ethereum ecosystem.
One of the key issues highlighted in Storm’s case is the confusion surrounding Section 1960, the charge of operating an unlicensed money-transmitting business. Amanda Tuminelli, Chief Legal Officer at the DeFi Education Fund, raised concerns about the DOJ’s interpretation of Section 1960, noting the legal ambiguities and conflicting interpretations that have arisen.
Tuminelli argued that protocols like Tornado Cash, which are non-custodial and do not control user funds, should not fall within the scope of Section 1960. She emphasized that self-custodial protocols cannot be classified as money-transmitting businesses under the statute’s plain language. Entrepreneur Vivek Ramaswamy echoed this sentiment, suggesting that authorities should focus on pursuing bad actors rather than targeting developers like Storm.
In conclusion, the prosecution of Roman Storm and the legal challenges faced by developers in the crypto space highlight the need for clarity and consistency in regulatory frameworks. As the case unfolds, it will be crucial to ensure that innovation is not stifled by overzealous enforcement actions.