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The U.S. Department of Justice Drops Part of Case Against Tornado Cash Co-Founder Roman Storm

The U.S. Department of Justice (DOJ) has decided to drop a portion of the criminal case against Roman Storm, co-founder of the cryptocurrency mixer Tornado Cash. This move comes just weeks before Storm’s trial, scheduled for July 14.

Government Withdraws Charge Related to Licensing

In a letter dated May 15, Acting U.S. Attorney Jay Clayton informed Judge Katherine Polk Failla of the Southern District of New York that the DOJ would no longer pursue allegations related to operating an unlicensed money transmitting business. Specifically, prosecutors have dropped charges under Title 18 U.S. Code § 1960(b)(1)(B), which accused Storm of failing to comply with registration requirements for money transmitting businesses.

While this part of the case has been dismissed, the DOJ will continue to pursue other charges against Storm. These include accusations of conspiring to commit money laundering, conspiring to violate the International Emergency Economic Powers Act (IEEPA), and conspiring to transmit funds derived from unlawful activity.

DOJ’s Stance on Crypto Regulation

In the letter, Clayton referenced a memo from Deputy Attorney General Todd Blanche dated April 7, 2025. The memo directed the DOJ to avoid pursuing criminal cases for technical regulatory violations, such as failure to register, especially when platforms or developers may not have direct control over user activity.

“After review of this case, this Office and the Office of the Deputy Attorney General have determined that this prosecution is consistent with the letter and spirit of the April 7, 2025 Memorandum from the Deputy Attorney General,” Clayton stated.

Background of the Tornado Cash Case

Roman Storm, along with fellow co-founder Roman Semenov, was charged in 2023 for allegedly facilitating the laundering of illicit funds through Tornado Cash. The crypto mixer is designed to anonymize blockchain transactions by pooling user deposits and redistributing them to different addresses, effectively breaking the on-chain link between sender and recipient.

Authorities claim that the platform was used by criminal organizations, including North Korea’s Lazarus Group, to launder stolen or sanctioned assets. Storm has pleaded not guilty to the charges and has sought to have some of them dismissed, arguing that they violate his First Amendment rights.

Legal Challenges for Crypto Developers

The Tornado Cash case has sparked a broader debate over developer liability and the legal boundaries of open-source software in the cryptocurrency industry. Critics argue that prosecuting developers for how their software is used sets a dangerous precedent, potentially stifling innovation in the sector.

In addition to Storm’s legal battle, co-founder Alexey Pertsev faced similar scrutiny. Pertsev was arrested in the Netherlands in 2022 on suspicion of facilitating money laundering through Tornado Cash. He was later convicted and sentenced to five years and four months in prison. In February of this year, Pertsev was released under electronic monitoring as he prepared his appeal.

Looking Ahead

Roman Storm’s trial, set to begin this summer, will likely shine a spotlight on the evolving intersection of crypto regulation and developer accountability. As the legal proceedings unfold, the case could have significant implications for the future of open-source development in the cryptocurrency space.

Key Takeaways for Crypto Enthusiasts

For beginners and intermediate investors in the cryptocurrency space, this case offers a few important lessons:

  • Understand regulatory risks: While crypto platforms offer innovative solutions, some face scrutiny from regulatory bodies. Always research the legal standing of projects before investing.
  • Track industry developments: Cases like Tornado Cash highlight the importance of staying informed about legal and regulatory changes in the crypto sector.
  • Open-source implications: Developers must consider the potential misuse of their creations and the legal accountability tied to such scenarios.

The Tornado Cash case demonstrates the delicate balance between fostering innovation and enforcing compliance in the cryptocurrency industry. As regulations continue to evolve, enthusiasts and developers alike should remain vigilant and informed.

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