Crypto Community Rallies $2.3M for Tornado Cash Devs’ Legal Defense

The cryptocurrency community has banded together to support the developers of Tornado Cash, a former crypto mixing service, who now face charges of money laundering, sanctions violations, and operating an unlicensed money-transmitting business. One developer has already been convicted and jailed. The arrests of Roman Storm, a co-founder of Tornado Cash, and developer Alexey Pertsev have galvanized the crypto community, leading to the formation of JusticeDAO. This advocacy group aims to raise funds for the legal defense of Storm and Pertsev.

JusticeDAO has successfully amassed over 654 Ether (ETH), equivalent to $2.3 million, through a fundraiser called “Free Alexey & Roman” on the decentralized platform Juicebox. The fund received 70 ETH via the JusticeDAO page. Juicebox has made the financial transactions of this fund transparent by releasing a publicly available spreadsheet that tracks the expenses related to the legal defense of the developers. As per the available data, a total of $1.39 million was already spent on legal fees from December 2023 to May 2024. The fund is preparing to spend an additional $2.8 million over the next five months and $400,000 more on expert research and other related legal services. By the end of 2024, projected expenses may climb to nearly $3.35 million.

One of the notable contributors to this fund is Ethereum co-founder Vitalik Buterin, a well-known privacy advocate who has made significant contributions to enhancing privacy within Ethereum. The crypto community maintains that developing tools to protect financial privacy, such as crypto mixers, should not be considered a criminal activity. Authorities have a different perspective on the matter. Despite community support, the founders of Tornado Cash are still facing severe legal accusations.

In 2022, the U.S. Treasury Department claimed that Tornado Cash facilitated the laundering of more than $7 billion in crypto assets over nearly three years by various criminals. A year later, in August 2023, Storm and another co-founder, Roman Semenov, were accused of money laundering and violating sanctions. Storm was arrested by the FBI while Semenov was added to the Treasury’s sanction list. Storm faces multiple charges, including conspiracy to commit money laundering, operating an unlicensed money-transmitting business, and violating the International Emergency Economic Powers Act. He has pleaded not guilty to all accusations.

Seeking to dismiss the charges, Storm’s legal team argues that the money laundering accusations are fundamentally flawed, asserting that Storm had no control over who used the crypto mixer. They claim Tornado Cash was publicly available long before any sanctioned entities began using it. In May 2024, a Dutch court found Pertsev guilty of laundering $1.2 billion in illicit assets on Tornado Cash and sentenced him to five years and four months in prison.

This case raises important questions about the legal responsibilities of developers for the potential misuse of the tools they create. Josh Garcia, a partner at Ketsal, a law firm specialized in fintech, Web3, and consumer financial services, suggests that holding developers accountable for the criminal uses of their software could force many to remain anonymous or quit the industry altogether out of fear. Garcia warns that the impact of such legal decisions could extend beyond blockchain, affecting various tech sectors and stifling innovation.

Garcia poses a broader question about legal liability across technologies, wondering if a 3D printer manufacturer should be accountable if its products are used to manufacture firearms in areas where gun ownership is illegal. He fears that if the current Dutch legal stance extends to the U.S. and if the First Amendment does not protect coding as free speech, developers may avoid public scrutiny and opt to work in secrecy, which could halt progress in the blockchain sector significantly.

Rebecca Liao, co-founder and CEO of Web3 development platform Saga, believes the issue transcends merely writing code. According to her, the U.S. legal system requires more than just creating code to constitute a criminal offense; it necessitates demonstrated criminal intent. In the Tornado Cash case, the prosecution aimed to show that the developers knowingly facilitated illegal activities. The court’s agreement with this argument underlines the necessity for developers to anticipate potential misuse of their creations and build safeguards to avert legal issues.

The upcoming trial of Storm represents a critical juncture for the crypto industry, particularly for services focused on privacy. The prosecution of Pertsev in the Dutch court has already sent shockwaves through the developer community, and legal experts anticipate that it will place unprecedented pressure on developers involved in similar projects. Jamie Wright, founder of the Wright Law Firm, highlighted that cases involving technology and criminal intent generally result in severe penalties due to the perceived threat these technologies pose to financial and regulatory systems. The future of Tornado Cash’s founders will largely depend on whether the courts interpret their actions as neutral advancements in technology or as intentional enablers of illegal activities.