DOJ Risks New Legal Front in DeFi with Roman Storm’s Warning

Roman Storm, founder of Tornado Cash, raised alarms for developers of decentralized finance (DeFi) protocols, warning they face potential retroactive prosecution by the U.S. Department of Justice (DOJ).

Storm questioned how DeFi builders can be certain they won’t be charged as unlicensed money transmission businesses simply for creating non-custodial platforms.

His concerns signal growing regulatory uncertainty chilling innovation in open-source crypto development.

Storm’s warning follows his August conviction for conspiracy to operate an unlicensed money transmission business related to Tornado Cash, a decentralized privacy protocol.

Despite the decentralized nature of the protocol—beyond any single entity's control—Storm faces up to five years in prison after a jury convicted him on one count while deadlocking on others.

His case has sent tremors through the crypto community, spotlighting the challenging legal landscape DeFi developers now navigate.

DeFi’s Legal Future in Question as DOJ Shifts Policy

Legal experts note Storm’s case sets troubling precedent, as the DOJ has signaled it could treat any decentralized, non-custodial platform as offering custodial services liable for licensing.

Echoing Storm’s own legal motion filed September 30, this approach could implicate untold numbers of open-source developers.

However, there are signs of regulatory recalibration. Acting Assistant Attorney General Matthew Galeotti recently announced the DOJ will not pursue charges against developers of genuinely decentralized software who lack control over user funds and act without criminal intent.

Galeotti emphasized that simply writing code is not a crime and criticized using indictments to create new laws.

This statement, supported by legal voices such as Jake Chervinsky of Variant Fund, offers a ray of clarity but does not apply retroactively to Storm’s case.

Meanwhile, the Ethereum Foundation and Keyring Network collaborate to fund Storm’s legal defense, dedicating all proceeds from zkVerified vault fees to the cause.

This coordinated support underscores the high stakes for privacy and DeFi innovation under increasing government scrutiny.

Storm’s stark question remains poignant on industry forums like X: “How can developers be sure the DOJ won’t target them next?” As regulators and courts grapple with new technology’s legal contours, the future of DeFi development hangs in the balance, making Storm’s trial a pivotal moment for the entire crypto ecosystem.