Tornado Cash Developer Retrial: Status and
Published 6/17/2026, 3:09:07 AM
Current Case Status
Roman Storm, co-developer of Tornado Cash, received a mixed verdict on August 6, 2025 in the Southern District of New York. The jury convicted him on one count of conspiracy to operate an unlicensed money-transmitting business (18 U.S.C. § 1960) while deadlocking on two more serious charges: conspiracy to commit money laundering and conspiracy to violate sanctions/IEEPA. Storm remains free on bail pending sentencing and post-trial motions.
The DOJ filed a retrial request on March 9, 2026, with proposed start dates of October 5 or 12, 2026, estimating the retrial would last approximately three weeks. If convicted on all deadlocked charges, Storm faces up to 40 additional years in prison on top of the 5-year sentence from the existing conviction. Post-trial motion hearings occurred on April 9, 2026, and an appeal to the U.S. Court of Appeals for the Second Circuit is anticipated.
Key Legal Arguments Being Revisited
| Side | Core Arguments |
|---|---|
| Defense | Tornado Cash's smart contracts were immutable once deployed — Storm "burned the keys" and had no operational control; writing and deploying open-source code is fundamentally different from operating a financial service; no custody of user funds was ever taken; the entire mixing process occurred automatically without human intervention |
| Prosecution | Storm was aware criminals used the platform and continued operating and promoting it anyway; he profited through hosting the front-end, governance tokens (TORN), and relayer algorithm; failed to implement sufficient safeguards despite knowledge of criminal use |
The Fifth Circuit Precedent
A critical development is the Van Loon v. Department of Treasury ruling from November 26, 2024, where the Fifth Circuit held that OFAC exceeded its statutory authority by sanctioning Tornado Cash's immutable smart contracts. The court ruled that immutable smart contracts are not "property" under IEEPA because they are "unownable, uncontrollable, and unchangeable" — users maintain "total independent control" over their tokens and the mixing process occurs "automatically—with no human intervention." This ruling led to Treasury officially delisting Tornado Cash from the SDN List on March 21, 2025. Roman Semenov remains individually sanctioned.
Potential Precedent for Privacy Protocol Liability
The retrial outcome will likely determine where the line exists between publishing software and operating a financial service — a question that directly affects non-custodial wallets, DeFi protocols, privacy-enhancing tools, and open-source financial infrastructure developers.
What the case has already established:
- Jurors were unpersuaded by Storm's "lack of control" argument, suggesting courts may expect developers to find ways to oversee their creations even when technically decentralized
- Prosecutors can succeed on narrower "operating an unlicensed money transmitting business" theories even when more serious charges fail
- The Fifth Circuit's distinction between immutable (not sanctionable) and mutable (potentially liable) smart contracts provides guidance, but the criminal context remains unsettled
What remains uncertain:
- Whether the Second Circuit will extend Fifth Circuit logic to the criminal context
- Whether "operating" a money transmitting business can apply to developers of non-custodial software
- How courts will balance First Amendment protections for code-as-speech against financial crime statutes
Industry Response
The Ethereum Foundation pledged $500,000–$750,000 to match defense contributions, and over $5 million was raised for the defense fund. Vitalik Buterin published an open letter in January 2026 calling for leniency. The Blockchain Association called the verdict a "dangerous precedent."
Outlook
The retrial is scheduled for October 2026. The defense will likely argue that immutable contracts cannot constitute "operating" a money transmitting business, that no custody of funds negates money transmitter classification, and that the Fifth Circuit's logic should apply in the criminal context. Congress may eventually need to update IEEPA (enacted during the Carter administration) for modern decentralized technologies.
Bottom line: The retrial will test whether the Fifth Circuit's immutability ruling extends to criminal liability, potentially establishing binding precedent for the Second Circuit on whether non-custodial, autonomous smart contract developers can be prosecuted as money transmitters. The outcome remains speculative until the retrial concludes.
Follow-up suggestions:
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Monitor Second Circuit appeals — If Storm appeals post-retrial, the Second Circuit's ruling will be the definitive precedent for New York-based crypto cases. Set a calendar alert for Q4 2026 retrial dates.
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Track legislative activity — Monitor whether Congress introduces IEEPA reform bills in response to this case, as statutory clarification would supersede any judicial precedent.