Tornado Cash Co-Founder Seeks Charges Dropped

Roman Storm, co-founder of Tornado Cash, is seeking dismissal of charges against him following a key ruling by the Fifth Circuit Court. Storm’s legal team argues that the Treasury’s Office of Foreign Assets Control (OFAC) overstepped by sanctioning immutable smart contracts.

The ruling clarified that autonomous software cannot be classified as “property,” as no individual has control over it. Storm’s motion, filed on December 18, asserts this finding absolves him of responsibility.

The document states:

“The developers’ lack of control over the proceeds renders them legally incapable of conspiring to commit money laundering and negates the knowledge element of a money laundering charge.”

Decentralization and Lack of Control

Experts emphasize the difficulty of censoring or halting Tornado Cash operations due to its decentralized nature. Stephen Ajayi of Hacken, a blockchain cybersecurity firm, noted:

“Tornado Cash is fully decentralized, globally accessible, and hard to censor on Ethereum, which is the core principle of decentralization.”

The Fifth Circuit ruling highlighted that developers cannot be held liable for sanctioned entities using immutable smart contracts, as they are “powerless to stop” such transactions. Storm’s legal team added:

“Mr. Storm could no more choose to stop them than he could choose to stop the sun from rising.”

Background: Privacy vs. Sanctions

Tornado Cash is a decentralized coin mixer designed to preserve privacy by anonymizing crypto transactions. However, its services have been used by wallets linked to major hacks, including some reportedly associated with North Korea. This led to the U.S. Treasury sanctioning Tornado Cash in August 2022.

While privacy advocates welcomed the recent ruling, others continue to call for stricter government oversight. Irfan Shaik, founder of blockchain project Interstate, suggested regulators could target Ethereum validators and block builders to enforce sanctions.

“The government could punish block builders for including censored transactions in their blocks,” Shaik proposed.

Still, data shows Ethereum transaction censorship has significantly decreased—from 70% this summer to below 5% today, according to Censorship.pics.

What’s Next for Storm and Tornado Cash?

The Fifth Circuit’s decision marks a critical moment for crypto privacy and regulation. Storm’s motion to dismiss could set a precedent, determining whether decentralized protocols can be held accountable for misuse.

Privacy advocates view the ruling as a step toward safeguarding crypto’s decentralized principles, while regulators face increasing pressure to establish clearer frameworks.

As legal battles continue, the debate over balancing privacy, decentralization, and compliance in the crypto space remains far from settled.