Key Takeaways:
- Tornado Cash developer, convicted for laundering over $1B, faces five years in prison.
- Following the verdict, the Tornado Cash token (TORN) fell over 17%.
- A legal expert believes that the decision could be overturned in the Second Circuit.
Roman Storm, co-founder and developer of the controversial cryptocurrency mixer Tornado Cash (TORN), was found guilty on Wednesday of conspiring to operate an unlicensed money transmitting business. The verdict, delivered by a jury in the Southern District of New York, concludes a four-week trial that has closely followed the entire crypto industry. Following this news, TORN has plummeted and fallen over 17% in a single day at the time of writing.
According to the official press release from the U.S. Attorney’s Office, Southern District of New York, the prosecution convicted Storm, one of the co-founders and developers of operating a service that facilitated over $1 billion in illicit transactions. The charges also mentioned collaborating with the sanctioned North Korean hackers, the Lazarus Group and transmitting hundreds of millions of dollars for them.
This included his knowing transmission of hundreds of millions of dollars in criminal proceeds from the Ronin hack, which the Federal Bureau of Investigation (“FBI”) publicly attributed to the sanctioned North Korean cybercriminal organization, the Lazarus Group
Prosecutors argued that Storm was personally aware that criminals were using the platform but continued to operate and profit from the service, ultimately cashing out more than $12 million. For this conviction, he faces a maximum sentence of five years in prison.
However, in a significant development, the jury was unable to reach a unanimous decision on Storm’s two most serious charges: money laundering and sanctions violations. The judge ruled a partial mistrial on these counts.
Jake Chervinsky, Chief Legal Officer at Variant Fund, called the outcome “a sad day for DeFi”. According to him, “Section 1960 should not apply to the developer of a non-custodial protocol who lacks the control of user funds”. Chervinsky believes that the verdict should be appealed, expressing hope that the Second Circuit will examine and fix the numerous legal errors committed during the case.
