Two weeks ago, Tornado Cash co-developer Roman Storm called for financial aid while awaiting his trial. This call was in relation to the ongoing case against the popular cryptocurrency mixer following their sanctions by the U.S. Treasury Department. Storm, his co-developers, and other activists in the crypto community continue to argue for Tornado Cash's innocence and many fear this case could dictate the regulatory landscape going forward.

Why exactly is Tornado Cash in hot water though and how could this case affect the overall privacy in Web3.0? Let's find out!

What is Tornado Cash? 

Tornado Cash is a decentralized cryptocurrency privacy project built on the Ethereum blockchain. It essentially allows its users to anonymously mix their Ethereum-based tokens with those of other users. This function makes it difficult to track the origin and destination of funds which helps conceal its users' identities whenever they transact. 

Some argue that Tornado Cash is necessary in a crypto space moving towards privacy, security and decentralization. They say that people have a right to hide their personal information from centralized authorities and others who wish to view them. On the other hand, some also believe that the existence of Tornado Cash is concerning as it can facilitate illegal activities like money laundering or illicit transactions.

Sadly, the latter situation became the case when Lazarus group, an organization of North Korean hackers, allegedly used Tornado Cash to launder money and escape U.S. sanctions. Following this event, the U.S Treasury Department sanctioned Tornado Cash last 2022 for facilitating the money laundering of billions of dollars. These sanctions froze several wallets linked to Tornado Cash and prohibited any US citizen from interacting with the project.

What happened to their developers (case)? 

Unfortunately for the developers of Tornado Cash, they too were affected by the legal proceedings. Following the sanctions imposed by the U.S. Treasury, Tornado Cash co-developer Alexey Pertsev was arrested last August 2022 in Amsterdam for allegations of money laundering. Another co-developer of the project, Roman Storm, was also arrested last August 2023 in Washington on charges of conspiracy to facilitate money laundering, operating an unlicensed money transmitter and conspiracy to violate the International Emergency Economic Powers Act. Both developers have claimed innocence while stating that they only wrote code for Tornado Cash and did not actually launder any money. Their third co-developer, Roman Semenev, remains at large.

Roman Storm's call 

Several crypto users have taken the side of these developers including the famous whistleblower and privacy advocate Edward Snowden. Snowden called the sanctions against Tornado Cash as "deeply illiberal and profoundly authoritarian". "Free Pertsev and Storm", a crypto activist group, also recently created fundraisers through Juicebox, GoFundMe, and WeWantJusticeDAO.org in order to help these developers. In a recent video on X (formerly Twitter), Roman Storm called for financial aid while citing how "his legal team was going to put forth a strong defense". Storm also noted how he hoped to win the case not only for him and his family but for the whole crypto community. "Whether you're a passionate developer like me involved with Web3.0 or just care about software and privacy, this legal battle will affect you" said Storm. He claimed that "this case will set a major precedent for years to come."

What does this case mean for the future of Web3.0 privacy? 

Storm probably isn't wrong in his statement. With cryptocurrency, privacy coins and decentralized applications being relatively new technology, the cases against Tornado Cash are first of their kind. The outcome of this case will likely set a standard for how governments approach regulations related to privacy and decentralized technologies. Should the founders of decentralized protocol used to do harmful things be punished even if they weren't directly involved? How much privacy is one really entitled to? As crypto becomes more mainstream and more centralized entities or regulators enter the space, these are the questions we will need to ponder. Whatever happens though, it always helps to pay attention so keep your eyes peeled and hopefully regulators can find a balance between privacy and stopping illegal activity!