Tornado Cash Founder Retrial: Crypto Mixers Can Be Legal

Federal prosecutors are seeking to retry Tornado Cash co-founder Roman Storm on charges that a New York jury could not unanimously resolve, extending one of the most closely watched criminal cases in the digital-asset sector. The move comes even after Washington has acknowledged that crypto mixers can serve lawful privacy purposes, underscoring the tension between privacy technology and anti-money-laundering enforcement in the United States. Treasury removed Tornado Cash from its sanctions list in March 2025, while Justice Department policy has also shifted away from what officials call “regulation by prosecution.”

Why the Tornado Cash case still matters

The Tornado Cash prosecution has become a test case for how far the U.S. government can go in holding software developers criminally responsible for tools that can be used by both ordinary users and criminals. Tornado Cash is a crypto mixer built on Ethereum that helps obscure the on-chain trail between wallet addresses, a feature that privacy advocates say can protect legitimate users on transparent public blockchains. At the same time, U.S. authorities have long argued that mixers can be exploited to launder proceeds from hacks, sanctions evasion, and other illicit activity.

That conflict is now sharper because the policy backdrop has changed. In March 2025, the Treasury Department said it had exercised its discretion to remove sanctions on Tornado Cash after reviewing the “novel legal and policy issues” raised by sanctions in “evolving technology and legal environments.” More recently, Treasury acknowledged in a report to Congress that lawful users of digital assets may use mixers for financial privacy.

Prosecutors push to retry Tornado Cash founder even after Washington said crypto mixers have legal uses

The immediate issue is Roman Storm’s criminal case. Reporting this week indicates that federal prosecutors want to retry Storm after a jury returned a mixed outcome and failed to reach a unanimous verdict on some counts. That decision keeps alive a prosecution that many in the crypto industry expected might be narrowed or abandoned after the Treasury delisting and the Justice Department’s 2025 policy reset.

Storm was charged in 2023 alongside fellow Tornado Cash developer Roman Semenov. Prosecutors alleged that Tornado Cash facilitated laundering tied to major cyber thefts, including funds linked to North Korea’s Lazarus Group. When the charges were announced, the government said Tornado Cash had been used to launder more than $1 billion in criminal proceeds, including over $96 million from the Harmony and Nomad hacks cited by Treasury.

The retrial push is significant because it suggests prosecutors still believe they can persuade a jury that Storm crossed the line from building privacy software into criminal facilitation. Defense lawyers and crypto policy groups, by contrast, argue that punishing a developer for open-source privacy infrastructure risks criminalizing code itself. That debate has only intensified since courts and regulators began pulling back from earlier government actions against Tornado Cash.

The legal backdrop changed in 2025

Several developments in 2025 reshaped the environment around the Tornado Cash case.

• March 21, 2025: Treasury removed Tornado Cash from the sanctions list after reviewing legal and policy issues.
• April 7, 2025: Deputy Attorney General Todd Blanche issued a memo stating that the Justice Department “is not a digital assets regulator” and would move away from enforcement actions that effectively impose regulatory frameworks on digital assets.
• Late 2024 to 2025: Courts increasingly questioned or rejected the legal basis for sanctioning Tornado Cash’s immutable smart contracts, with a federal appeals court ruling against OFAC’s approach and a Texas judge later barring the agency from restoring those sanctions.

Taken together, those changes created a more favorable climate for privacy-tool advocates. They also gave Storm’s supporters a stronger argument that the government’s earlier approach to mixers was too broad and failed to distinguish between software and bad actors using that software.

What Washington has said about legal uses of mixers

The phrase at the center of this dispute is simple but consequential: crypto mixers can have legal uses. Treasury’s recent report to Congress explicitly recognized that lawful users may leverage mixers to preserve privacy on public blockchains. That matters because blockchain transactions are typically visible to anyone, meaning a user paying a contractor, donating to a cause, or moving personal funds can expose sensitive financial patterns without privacy tools.

This is not a new argument from the crypto industry, but it now carries more weight because it has been echoed by the government itself. Earlier challenges to the Tornado Cash sanctions, including lawsuits and public advocacy, argued that Americans used the protocol for legitimate personal privacy and lawful transactions. Treasury’s 2025 delisting did not endorse Tornado Cash’s past conduct, but it did acknowledge that the legal framework around sanctioning decentralized software was unsettled.

According to the Treasury Department’s March 2025 statement, the decision to delist Tornado Cash followed a review of “novel legal and policy issues” in an “evolving technology and legal environment.” That language has been widely read as recognition that the government’s earlier theory faced serious legal obstacles.

The prosecution’s case versus the defense view

Prosecutors have consistently framed Tornado Cash as more than neutral software. Their theory is that the platform’s operators knew criminals were using the service at scale and failed to implement effective controls, while continuing to profit from the system. U.S. authorities have repeatedly pointed to laundering linked to North Korean hackers and major crypto thefts as evidence that Tornado Cash became a critical node in illicit finance.

The defense view is narrower and more technology-focused. Storm’s legal team has argued that Tornado Cash was built as a privacy tool and that the existence of criminal users does not prove criminal intent by a developer. Coverage of the trial showed the defense emphasizing that adding identity-tracking features would have undermined the protocol’s privacy purpose.

According to Deputy Attorney General Todd Blanche’s 2025 memo, the DOJ should focus on criminal conduct that harms victims rather than using prosecutions to create digital-asset rules. That does not automatically end cases involving mixers, but it complicates the optics of retrying a developer while the federal government simultaneously says lawful users have valid reasons to use the same class of tools.

What the retrial could mean for crypto developers

A retrial would matter far beyond Tornado Cash. For developers, the case could shape how much legal risk attaches to writing and publishing privacy-preserving code, especially in decentralized finance. For compliance teams and investors, it may influence whether privacy tools are treated as legitimate infrastructure, high-risk products, or something in between.

The case also has implications for U.S. competitiveness. If developers conclude that building privacy tools carries open-ended criminal exposure, some may move projects offshore or avoid the sector entirely. On the other hand, law enforcement officials and national-security advocates argue that weak oversight of mixers can create channels for ransomware groups, hackers, and sanctions targets to move funds with less friction.

A balanced reading is that both concerns are real. Public blockchains create transparency that can aid investigations, but they also expose ordinary users’ financial histories. Mixers can protect privacy, yet they can also be abused. The unresolved policy question is whether criminal law should target the tool’s creators, the bad actors using it, or both.

Conclusion

The effort to retry Roman Storm shows that the Tornado Cash fight is no longer just about one protocol. It is about how the United States draws the line between lawful privacy technology and criminal financial concealment. Prosecutors appear determined to keep pressing their case, even after Treasury removed Tornado Cash from sanctions and acknowledged that mixers can serve legitimate purposes.

For the crypto industry, the retrial could become a defining moment in the legal treatment of open-source developers. For policymakers, it is a reminder that digital-asset enforcement remains unsettled, even as Washington’s own position evolves. The outcome may help determine whether privacy tools in crypto are governed primarily through targeted criminal cases, clearer regulation, or a combination of both.

Frequently Asked Questions

What is Tornado Cash?
Tornado Cash is an Ethereum-based crypto mixer designed to make it harder to trace transactions between wallet addresses by obscuring the on-chain link between deposits and withdrawals.

Who is Roman Storm?
Roman Storm is a co-founder of Tornado Cash who was charged by U.S. prosecutors in 2023 in connection with the operation of the mixer.

Did the U.S. government remove sanctions on Tornado Cash?
Yes. Treasury announced on March 21, 2025 that it had removed Tornado Cash from the sanctions list after reviewing the legal and policy issues involved.

Has Washington said crypto mixers can be used legally?
Yes. A recent Treasury report to Congress said lawful users of digital assets may use mixers to preserve financial privacy on public blockchains.

Why are prosecutors still seeking a retrial?
Because the earlier trial ended with a mixed result, and prosecutors appear to believe they can still secure convictions on the unresolved charges.

Why does this case matter beyond one company?
The case could influence how U.S. law treats open-source developers, privacy tools, and the broader boundary between software creation and criminal liability in crypto.