The storm continues: The controversial lawsuit against Roman Storm, co-founder of Tornado Cash, is still ongoing.

The U.S. Department of Justice has decided to continue its legal proceedings against Roman Storm, co-founder of Tornado Cash.

The legal battle facing Roman Storm, one of the creators of Tornado Cash, continues in the United States. Although the Treasury Department lifted sanctions against the cryptocurrency mixing protocol Tornado Cash last March, the Department of Justice (DOJ) has made it clear that the criminal proceedings against its founder, Storm, will continue.

The Treasury's decision to drop the charges against the platform came after a federal court ruled that immutable smart contracts, like those used by Tornado Cash, cannot be considered property and therefore cannot be subject to sanctions. However, this victory for the crypto community has not halted the criminal action against Storm, who continues to face related criminal charges. 

The Storm case is shaping up to be one of the most significant in the history of the crypto ecosystem, as it could set key precedents regarding the legal liability of developers in the world of decentralized technology.

Sanctions against Tornado Cash are lifted

In March of this year, a United States court ordered to lift the sanctions imposed by the Treasury Department against Tornado Cash, a cryptocurrency mixing protocol that allows users to conceal the origin and destination of their transactions to ensure financial privacy. The move follows a court ruling that immutable smart contracts, which form the technological basis of Tornado Cash, cannot be considered property subject to sanctions. The court argued that because these contracts are open source and cannot be modified or controlled by a specific entity, it is unlawful to sanction them as if they were assets or property of a person or company.

This decision had a significant impact on the direction of US regulatory policy toward cryptocurrencies, as the Office of Foreign Assets Control (OFAC) was forced to remove Tornado Cash from its blacklist and refrain from reimposing the aforementioned sanctions on the protocol. 

As reported by this outlet, the ruling recognized the complexity of applying traditional regulations to decentralized technologies in the crypto ecosystem.

Roman Storm's trial continues, but charges are amended

Despite the withdrawal of sanctions against Tornado Cash, the Department of Justice has decided to maintain charges against Roman Storm, who was accused of illicit activities in 2023 along with Roman Semenov, also a co-founder of the platform. 

In this regard, the United States Department of Justice has specified the charges that Roman Storm will face in the trial scheduled for July 14, 2025. In a letter Sent to Judge Katherine Polk Failla on May 15, federal authorities confirmed that Storm will be tried primarily for conspiracy to commit money laundering and conspiracy to violate U.S. sanctions. 

The government alleges that Tornado Cash facilitated the laundering of several million dollars in cryptocurrency, including funds linked to the U.S.-sanctioned Lazarus Group. According to prosecutors, Tornado Cash allegedly transmitted funds knowing they were derived from illicit activities or would be used for such purposes.

However, an additional charge, related to conspiracy to operate an unlicensed money transmission business, was recently dropped from the case against Storm. This decision reportedly followed a US court order dismissing the charges against the decentralized platform. 

Storm has pleaded not guilty to the charges and will continue his defense in a court case that will be closely watched by the international crypto and regulatory community. 

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The crypto community is watching the precedent for the crypto industry.

The Roman Storm case is one of the most significant in the legal history of cryptocurrencies, as it calls into question the criminal liability of developers of decentralized protocols. The prosecution argues that, although Tornado Cash is open-source software, its creators may be liable for third parties' illicit use of the platform. This argument opens a debate about the extent to which programmers can be held responsible for the actions of their tool users.

Furthermore, the court ruling that prevented Tornado Cash from being sanctioned as immutable property has set a precedent limiting the government's ability to apply traditional economic sanctions to decentralized technologies. This scenario forces regulators to rethink their strategies for combating illicit activity and sanctions evasion in a digital and decentralized environment.

Overall, this court case is being closely watched by the crypto community, as its ruling could set clear boundaries for the regulation of cryptocurrency mixers and other privacy tools, which are essential for protecting financial privacy.

The regulatory context and reactions in the cryptocurrency industry

The trial of Tornado Cash and its founders has been a point of controversy within the cryptocurrency sector. Many developers and privacy advocates have expressed concern about the criminalization of tools that are essentially open source and allow for private, non-custodial transactions. Roman Storm, for his part, has publicly stated that he is being prosecuted solely for creating software that facilitates financial privacy, a right he considers fundamental for everyone.

Tornado Cash is a decentralized Ethereum protocol designed to preserve financial privacy through mixing digital assets. Storm's defense team maintains that developing and publishing open-source software does not constitute a crime, arguing that the protocol does not retain user funds and does not meet the legal definition of a money services business, according to FinCEN documents. Additionally, Storm's lawyers have accused prosecutors of failing to disclose key communications with FinCEN that could be relevant to their defense.

Overall, this case highlights the regulatory challenges facing the crypto industry, as some sectors demand greater oversight to prevent illicit uses of cryptocurrencies, while others defend the importance of privacy and decentralization as fundamental principles of the blockchain ecosystem.

So, despite the partial dismissal of charges and the recent reversal of sanctions imposed on Tornado Cash, the DOJ maintains its primary charge against Storm. The trial, as mentioned, is scheduled for July and will be key to defining the legal boundaries surrounding the development of financial privacy technologies.

Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.