US court rejects Tornado Cash developer's motion to dismiss on April 8

The U.S. Department of Justice on April 8 rejected Tornado Cash developer Roman Storm's motion to dismiss his criminal case, signaling a significant legal test for developer liability in the crypto sector.

In a letter to Federal Judge Katherine Polk Failla, the DOJ asserted that a Supreme Court copyright ruling cited by Storm’s defense is irrelevant to the criminal charges he faces, which include conspiracy to commit money laundering and sanctions violations.

Storm's defense argued that he merely wrote and published open-source code, a position they compared to a software developer's liability under a recent Supreme Court copyright decision. The DOJ countered that Storm and his co-founders operated Tornado Cash as a for-profit business, making them culpable for its use by illicit actors, including North Korea's Lazarus Group. The government alleges the service laundered more than $1 billion in illicit proceeds.

A conviction in this case could establish a far-reaching precedent that developers of decentralized protocols are legally liable for how their code is used, potentially stifling innovation in privacy-preserving technologies across the digital asset landscape and increasing regulatory risk for the entire DeFi sector. The outcome is being closely watched by other privacy-focused projects like Monero and Zcash.

This article is for informational purposes only and does not constitute investment advice.