Tornado Cash Developer Roman Storm Warns DeFi Developers About Retroactive Prosecution
Roman Storm, a developer behind the Tornado Cash privacy protocol, recently raised concerns about the risk of retroactive prosecution by the U.S. Department of Justice for building decentralized finance platforms. His warning is pivotal for crypto developers facing an increasingly uncertain regulatory landscape.
Storm asked DeFi developers: “How can you be so sure you won’t be charged by the DOJ as a money service business for building a non-custodial protocol?” The question reflects growing anxiety within the developer community about legal exposure.
Storm suggested the DOJ could argue that any decentralized, non-custodial service should have been developed as a custodial service instead. This interpretation would fundamentally reshape how developers approach building blockchain technologies. His concerns stem from his legal battles, which have already sent shockwaves through the crypto industry.
Tornado Cash Developer Conviction Sparks Developer Liability Debate
In August 2025, a jury convicted Storm of conspiring to operate an unlicensed money-transmitting operation but deadlocked on two more serious charges involving money laundering and sanctions violations. The mixed verdict highlighted the complexity of applying traditional financial regulations to decentralized technologies.
Storm emphasized in court documents that Tornado Cash operates as a decentralized protocol beyond any entity’s control. He argued that neither he nor his company could affect changes to the protocol after deployment. Storm filed a motion for acquittal on September 30, challenging the legal basis of his conviction.
The conviction has raised fundamental questions about developer accountability. Legal experts debate whether creators of privacy-preserving tools should bear criminal responsibility for misuse by bad actors. The trial addressed whether developers of decentralized privacy technologies can be held criminally liable for illicit activities of third parties using their software.
DOJ Signals Shift Away From Prosecuting Code Writers
Despite Storm’s conviction, there are signs of changing enforcement priorities. Matthew Galeotti, acting assistant attorney general for the DOJ’s criminal division, stated in August that the department would not initiate a retrial of Storm for the deadlocked charges.
Galeotti declared that “merely writing code, without ill intent, is not a crime.” He emphasized that prosecutors should not leave innovators uncertain about what could trigger criminal prosecution. The DOJ official stated the department would not use indictments as a law-making tool.
The DOJ issued a report in April 2025 titled “Ending Regulation by Prosecution,” stating it would no longer pursue actions that impose regulatory frameworks on digital assets. The report mentioned that prosecutors would not charge regulatory violations in digital asset cases. This policy shift offers some reassurance to developers but leaves many questions unanswered.
Non-Custodial Protocol Developers Face Unclear Legal Standards
Current U.S. laws do not explicitly protect open-source software developers, creating risks of retroactive prosecution. This legal ambiguity forces developers to navigate without clear guidelines, and the absence of protective legislation means developers remain vulnerable to changing enforcement interpretations.
Storm’s case illustrates the challenges faced by builders of privacy-enhancing technologies. Tornado Cash allowed users to anonymize cryptocurrency transactions by obscuring transaction origins and destinations. While designed for legitimate privacy purposes, the protocol was exploited by malicious actors for money laundering.
The crypto community has rallied around Storm’s case, viewing it as a test of whether building privacy tools constitutes criminal activity. Industry advocates argue that holding developers liable for user misuse threatens innovation and open-source development. They compare it to prosecuting web browser creators for how criminals use their software.
Regulatory Clarity Needed for DeFi Developer Protection
The Storm case underscores the urgent need for comprehensive regulatory frameworks governing decentralized technologies. Without clear standards, developers face impossible choices between building privacy-preserving tools and avoiding potential prosecution. The current environment stifles innovation and pushes development offshore.
Industry groups are pushing for legislation that clearly distinguishes between developers of neutral technology and individuals who actively facilitate criminal activity. Clear definitions of money transmission, custody, and developer liability could provide the certainty for responsible innovation to flourish domestically.
The outcome of Storm’s legal battle will significantly impact the future of privacy technology and decentralized finance. Developers are watching closely as courts grapple with applying decades-old financial regulations to cutting-edge blockchain protocols. The resolution may determine whether the United States remains competitive in crypto innovation or drives development elsewhere.
Conclusion
Roman Storm’s warning highlights the precarious position of DeFi developers under current U.S. regulations. While DOJ officials have signaled a more nuanced approach to prosecuting code writers, the lack of clear legal protections creates ongoing uncertainty. The crypto industry awaits comprehensive regulatory guidance that balances innovation with legitimate enforcement concerns.
