Tornado Cash cofounder dodges money laundering conviction, found guilty of lesser charge

A cofounder of the cryptocurrency mixing service Tornado Cash was found guilty on Wednesday of conspiring to operate an unlicensed money-transmitting business, while the jury failed to reach a ruling on the more significant charges of conspiracy to commit money laundering and to violate sanctions. 

The partial verdict in the federal Southern District of New York is something of a win for Roman Storm, the software developer who has been heralded among many in the cryptocurrency world as a crusader for digital privacy rights. The government contended that Storm and his associates knowingly operated Tornado Cash as a money laundering service for cybercriminals. 

He faces a maximum of five years in prison, averting for now two potential 20-year sentences for the money laundering and sanctions charges.

Since its founding in 2019, the mixer facilitated the laundering of more than $1 billion in illicit funds, the Justice Department alleged, including hundreds of millions by North Korea’s Lazarus Group hackers. It was sanctioned in 2022 by the Treasury Department for its alleged links to cybercriminals and for having “repeatedly failed to impose effective controls” to prevent laundering, a senior official said at the time.

Storm and his defense team contended that he merely created software to offer crypto users privacy and that he was not ultimately responsible for how it was used. Coins that are run through Tornado Cash are pooled with those from other users and anonymized. 

Some of Tornado Cash’s privacy preserving features meant the platform’s administrators did not have any control over which transactions were made and who made them, the defense argued.

In a tweet before the trial started, Storm wrote: “I poured my soul into Tornado Cash.” 

“The dream of financial freedom, the code I believed in—it all fades into darkness,” he said. “I’m fighting, but the weight is unbearable. This isn’t just my end; it’s ours.” 

In closing arguments, prosecutor Benjamin Gianforti reportedly told the jury that “privacy became the cover story for Tornado Cash, not the goal.”

The government’s case against Storm, which began with his arrest and indictment in 2023, was muddied by the presidential transition from Joe Biden to Donald Trump and a shift in the regulatory tenor around cryptocurrency. 

In May, the prosecution informed the court it would not go after Storm for failing to meet registration requirements as a money transmitting business, citing a memo from Deputy Attorney General Todd Blanche instructing the DOJ to put an end to charges over “regulatory violations” involving digital assets. 

Instead, the prosecution pursued charges against Storm for running an unlicensed money transmitting business that specifically “involves the transportation or transmission of funds” connected to criminal activity.

Despite Storm avoiding significant prison time, the crypto industry quickly decried the jury’s verdict. In a statement, the industry group Blockchain Association called on Storm to appeal the decision. “The Trump administration has set out to enhance legal and regulatory clarity and protect American innovation,” the group’s senior counsel, Laura Sanders, said. “We therefore urge the Trump administration to act swiftly to end the Biden-era approach of 'regulation by prosecution' by declining to re-prosecute.” 

Sanders also called for an amendment to the law around unlicensed money transmitters “so it cannot be misapplied to non-custodial software developers."

In May 2024, Tornado Cash cofounder Alexey Pertsev was sentenced in the Netherlands to 64 months in prison on a money laundering conviction. He has filed an appeal and a preliminary hearing was held in June. Roman Semenov, the third cofounder who was charged alongside Storm, remains at-large. 

In late July, the cofounders of the cryptocurrency mixer Samourai Wallet — which allegedly processed more than $200 million in illicit transactions — pleaded guilty in the Southern District of New York to conspiracy to operate a money transmitting business connected to crime proceeds. The charges carry a maximum sentence of five years in prison.