Tornado Cash Founder Warns of Legal Perils for DeFi Developers Amid DOJ Scrutiny
Roman Storm, co-founder of the privacy-focused crypto protocol Tornado Cash, has issued a stark warning to the decentralized finance (DeFi) developer community: building open-source, non-custodial software may now expose creators to retroactive criminal liability in the United States.
Storm, who is currently embroiled in a legal battle with federal prosecutors, emphasized that the Department of Justice (DOJ) appears to be treating DeFi developers as potential operators of unlicensed financial services. His cautionary message comes amid a growing legal debate about whether writing and publishing code — especially code that facilitates anonymous or pseudonymous financial transactions — can be treated as operating a money service business (MSB).
In recent public statements and court filings, Storm questioned the very foundation of open-source development in the crypto space. “How can you be so sure you won’t be charged by the DOJ as an MSB — simply for building a non-custodial protocol?” he asked. He pointed to the lack of clear legal protections for individuals who create decentralized tools that others may use to transfer value, even without centralized control.
The DOJ has alleged that Tornado Cash was used to launder over $1 billion in illicit funds. Prosecutors claim that its core functionality — enabling users to mix cryptocurrency transactions to obscure their origin — facilitated criminal activity, including by sanctioned entities. Storm and his legal team, however, argue that the platform is fundamentally non-custodial: it does not control or hold user assets, nor does it operate like a traditional financial institution.
The legal proceedings in Manhattan have already produced mixed outcomes. While the jury failed to reach a consensus on some of the more severe charges, the case has sparked alarm across the legal and crypto communities alike. Defense attorneys contend that punishing developers for how their open-source code is used sets a dangerous precedent, potentially criminalizing the act of software publication itself.
Legal scholars and crypto law experts warn that if the DOJ’s interpretation succeeds, it could reshape the future of DeFi and open-source development in the U.S. The case raises constitutional questions about freedom of speech, as code is widely considered a form of protected expression under U.S. law.
Storm’s defense emphasizes decentralization as a key differentiator. Unlike centralized exchanges or custodial wallets, Tornado Cash operates autonomously on public blockchains. No single entity or individual maintains control over the protocol once it is deployed, they argue — a fact that should absolve developers of criminal liability.
In motions filed with the court, Storm’s attorneys are seeking to have the charges dismissed or the verdict overturned. They argue that the DOJ’s theory is legally flawed and technologically unrealistic. Meanwhile, prosecutors assert that developers who design and promote tools in full awareness of their potential for illicit use cannot hide behind decentralization to escape accountability.
The crypto community, in response, has rallied around Storm, organizing fundraising efforts to support his legal battle. Many believe the outcome of this case could set a defining precedent for the future of DeFi innovation in the United States. If developers are held liable for how others use their code, it could stifle experimentation and discourage the development of privacy-preserving technologies.
This legal battle has also rekindled the long-standing debate over privacy versus regulation in the crypto space. While governments aim to curb money laundering and enforce sanctions, privacy advocates argue that these goals must be balanced against the right to build and use privacy tools. They caution that criminalizing such technologies could push innovation underground or overseas, undermining both technological progress and regulatory oversight.
In the wider context, the case against Tornado Cash reflects a broader crackdown by U.S. authorities on DeFi platforms and services. As regulatory bodies struggle to adapt outdated financial rules to decentralized systems, developers remain caught in legal limbo. The lack of clear guidelines has left many unsure of where the line between legal innovation and criminal conduct lies.
Some industry voices are now calling for legislative clarity. They argue that only through thoughtful regulation — not aggressive prosecution — can the U.S. foster a secure and innovative crypto ecosystem. Without legal frameworks that distinguish between malicious actors and legitimate developers, the country’s role as a hub for blockchain innovation may be at risk.
Others are pushing for more education among lawmakers about how DeFi protocols actually function. Misunderstanding the technical architecture of decentralized systems, they argue, can lead to misguided prosecutions and policies that do more harm than good.
As the Tornado Cash case unfolds, legal observers, developers, and privacy advocates alike are watching closely. The verdict may not only determine Roman Storm’s future, but also shape the boundaries of innovation, privacy, and responsibility in a rapidly evolving digital economy.