Solana Policy Institute Donates Half a Million Dollars to Tornado Cash Defense Fund
Both Pertsev and Storm are appealing their convictions.
The Solana Policy Institute has pledged $500,000 to the legal defenses of Roman Storm and Alexey Pertsev, two developers of the decentralized privacy service Tornado Cash. Storm and Pertsev have both been criminally convicted in connection with creating the privacy service, Storm in the U.S. and Pertsev in the Netherlands.
The SPI's pledge follows several other large donations to Storm's legal defense, but seems particularly laudable because it comes from outside the Ethereum ecosystem where Tornado Cash was initially deployed.
Tornado Cash Convictions are a Threat to Developers Around the World
“The allegations underlying these convictions are based on a fundamental misunderstanding of how blockchain technology works," wrote Miller Whitehouse-Levine, CEO of Solana Policy Institute, in an announcement shared with The Rage. "The Governments’ logic is simple but dangerous: If you write open-source code that anyone can use—for good or for ill— you're responsible for its misuse—even without any ongoing control over, or ability to control, the code at issue.”
The risk that Storm and Pertsev's convictions could establish broader precedents for prosecuting software developers for the misuse of their code has galvanized portions of the cryptocurrency and blockchain community around them. At Storm's trial, defense lawyers compared Tornado Cash to encrypted messaging services like WhatsApp, which are, of course, still legal.
But Roman Storm was convicted on August 6th of conspiracy to knowingly handle criminal funds in the course of operating a money transmitting business. That tangled mouthful reflects government prosecutors’ contortions on the way to earning a conviction on exactly one out of three charges, after they were forced to step back from more direct allegations that Tornado Cash actually was an MTB. Peter Van Valkenburgh of CoinCenter recently explained the absurd logic behind this charge in more depth in an appearance on Bankless.
Even presiding Judge Katherine Failla observed that there were many possibilities for appeal on the conviction, and Storm's defense team has signaled their intent to continue fighting.
On parallel charges of conspiracy to commit money laundering and conspiracy to violate international sanctions, the jury hearing Storm’s case was not able to agree on a verdict, leading to a mistrial on those charges. This may have reflected jury skepticism about Storm’s criminal intent; about the appropriateness of trying the case in the Southern District of New York; and/or confusion over government prosecutor’s almost unbelievably slapdash and seemingly improvisatory approach to witnesses and evidence.
But the hung jury leaves open the possibility that prosecutors will take a second bite at the apple, re-trying Storm on money laundering and sanctions conspiracy charges.
L0la L33tz
Double Jeopardy
The possibility of a repeat trial is almost certainly driving a rush of new donations to Storm after the trial’s conclusion. On August 8th, the Ethereum Foundation pledged to match up to $500,000 in community donations to Storm’s defense, bringing the EF’s total potential pledge to $1 million. Ethereum Core developer Federico Carrone, who was briefly detained in Turkey on suspicions of affiliation with Tornado Cash, subsequently pledged $500,000 of his own.
As of August 27, Storm’s legal defense fund reported collecting a total of $5.4 million in support, out of a total projected need of $7 million.
The mixed verdict in Storm's first trial did not result in a seizure of Storm’s assets, but it also made clear that he was in no position to fund his defense himself. Tornado Cash did not collect fees, and between 2020 and mid-2022, its creators were almost exclusively funded by $100,000 in venture investment from Dragonfly Capital. In August of 2022, after more than three years of development on the project, Storm and his cofounders sold their founders’ stakes in the TORN token for a total of $8 million, which the team split three ways.
The SPI's announcement also coincides with a joint industry-wide letter issued on Wednesday August 27th by the DeFi Education Fund. It calls on the U.S. Senate to create strong protections for developers against the kind of prosecution Storm has faced.
“The leaders of the crypto industry are speaking with one voice on a fundamental principle: public blockchains are neutral infrastructure just like the internet, roads, or bridges," Whitehouse-Levine said of the DEF's letter. "The U.S. doesn’t criminalize the engineers who build our highways when someone uses them to commit a crime. Congress must apply that same principle to digital infrastructure and include comprehensive protections for developers and non-custodial service providers in any market structure legislation.”
A well-funded Storm defense team will now take that question to U.S. appeals court as they seek to overturn his conviction on money transmission conspiracy. Pertsev is also appealing his conviction, but realistically, Storm's U.S. proceeding has broader implications, as how the US does, so too does commonly everyone else. If it were to reach the Supreme Court, Storm's appeal could establish a precedent separating developers from third-party use of their tools in perpetuity.
Independent journalism does not finance itself. If you enjoyed this article, please consider making a donation. If you would like to note a correction to this article, please email corrections@therage.co
