Roman Storm Convicted of Unlicensed Money Transmission, Jury Hung on $1 Billion Laundering Charge

Roman Storm, a co-founder of the cryptocurrency mixing service Tornado Cash, has been found guilty of one federal charge: conspiracy to operate an unlicensed money transmitting business. A Manhattan jury, however, remained deadlocked on two more severe charges, including conspiracy to commit money laundering involving over $1 billion in illicit funds and conspiracy to violate international sanctions. The partial verdict, delivered after a four-week trial, concludes a closely watched case with significant implications for the decentralized finance (DeFi) sector.

The conviction for operating an unlicensed money transmitting business carries a maximum sentence of five years in prison. The jury was unable to reach a unanimous decision on the money laundering charge, which could have resulted in up to 20 years, and the sanctions violation count. Despite prosecutors arguing Storm was a flight risk, U.S. District Judge Katherine Polk Failla allowed him to remain free on $2 million bail.

Tornado Cash, co-founded by Storm in 2019, is a tool designed to enhance privacy by obscuring the origin and destination of cryptocurrency transactions. Prosecutors contended that Storm knowingly facilitated the movement of over $1 billion in criminal proceeds through the platform, including funds stolen by the North Korean state-sponsored hacking group, Lazarus Group. They highlighted that Storm continued operations despite awareness of illicit use.

The defense maintained that Storm had no criminal intent and that Tornado Cash, once deployed, operated as a decentralized, non-custodial protocol beyond his control. His legal team argued that developers should not be held liable for the misuse of open-source software. Brian Klein, Storm's lawyer, expressed gratitude that the jury did not convict on the sanctions or money laundering charges, stating they would appeal the conviction.

The verdict has drawn strong reactions from the cryptocurrency community and legal observers, who view it as a "dangerous precedent" for open-source software developers and the broader DeFi ecosystem. Industry groups such as the Blockchain Association and the Ethereum Foundation have voiced concerns that it could criminalize the creation of neutral technology. The Ethereum Foundation has pledged $500,000 towards Storm's legal expenses.

The U.S. government now faces a decision on whether to pursue a retrial on the two charges where the jury was deadlocked. Storm's sentencing date has not yet been set, and his legal team intends to appeal the current conviction. The case continues to underscore the ongoing legal battle over regulatory oversight and developer liability in the rapidly evolving world of blockchain technology.

Amir Taaki, a prominent figure in the crypto space, shared a tweet stating,

"Roman Storm leaving the court room. Seems like victory is imminent in the case. 🎉" This sentiment, while reflecting a hopeful outlook, contrasts with the factual outcome of a conviction on one charge, even as Storm avoided the most severe penalties.