Software developer liability on trial as Tornado Cash prosecution continues

The criminal trial of one of the developers of Tornado Cash, a crypto asset privacy protocol which enabled users to obfuscate the source of crypto-assets, looks set to commence on Monday as pre-trial motions were considered in the New York Court this week.

Roman Storm faces charges of money laundering, operating an unlicensed money transmission business and conspiracy to commit sanctions violations. This week, Judge Katherine Failla, who will preside over the trial, granted Storm’s motion in limine to exclude references to the since-withdrawn sanctions against Tornado Cash. A motion in limine is a request before trial to exclude certain evidence or arguments from being presented to the jury.

The United States Treasury Department's Office of Foreign Asset Control (OFAC) added Tornado Cash-affiliated smart contract addresses to its Specially Designated Nationals (SDN) list in 2022 after the infamous North Korean hackers, the Lazarus Group, used the protocol to launder crypto-assets from hacking operations. However, the US Fifth Circuit Court of Appeals found that OFAC had exceeded its statutory authority under the International Emergency Economic Powers Act (IEEPA) by sanctioning immutable smart contracts, which it found could not constitute “property” under the IEEPA.

OFAC announced in March 2025 that several of these smart contract addresses would be removed from the SDN list, following a District Court judgment permanently enjoining OFAC from enforcing the sanctions. The US Court of Appeals also dismissed a case brought by Coin Center seeking administrative action against OFAC after the withdrawal of the sanctions rendered the case moot. OFAC for its part has not ruled out enforcing similar sanctions in future or against other "non-immutable smart contract" based technologies.

In a recent hearing in Manhattan, Judge Failla said that “[t]he words ‘Van Loon’ are not going to show up in this trial” because the reference to the earlier case and sanctions would likely confuse jurors, unless the prosecutors present a “unicorn” document that would justify reconsideration. She further noted the risk of jurors engaging in “mental gymnastics” over why the sanctions were imposed and later removed by OFAC, alluding to the complicated analysis of blockchain technology and smart contracts.

However, not all of Storm’s motions in limine were granted. Judge Failla allowed prosecutors to introduce references to North Korea’s Lazarus Group and “inflammatory characterizations” of Storm’s TORN token sales.

Speaking about the case, Storm wrote on X:

The DOJ wants to bury DeFi, saying I should’ve controlled it, added KYC, never built it. SDNY is trying to crush me, blocking every expert witness. If I lose, DeFi dies with me. The dream of financial freedom, the code I believed in—it all fades into darkness. I’m fighting, but the weight is unbearable. This isn’t just my end; it’s ours.

He continued:

Support has poured in for Storm from the blockchain community. The Ethereum Foundation pledged US$500,000 to his legal defence, joined by personal donations from Ethereum co-founder Vitalik Buterin and Paradigm’s Matt Huang.

A final pre-trial hearing is set for Friday 11 July 2025, and the estimated four-week long trial is scheduled to begin on 14 July.

While the US Appeals Court decision in Van Loon has provided important clarity that immutable smart contracts are not subject to sanction by OFAC under US laws, the battle over the extent to which software developer liability for creating open source and free software, which may be used for both useful and illegal purposes by criminal groups will continue to be highly contested. Crypto was born from a libertarian mindset and many will view restrictions on free and open source code development to have a chilling impact on software development, whereas others will argue that there must be responsibility for code created which can be used to breach laws.

Written by Steven Pettigrove, Michael Bacina and Emma Assaf