Federal prosecutors are moving to retry Tornado Cash co-founder Roman Storm on two unresolved criminal counts, even after Washington acknowledged that crypto mixers can serve lawful purposes such as financial privacy. The renewed push sets up a fresh clash between US law enforcement and the digital-asset industry over where privacy technology ends and criminal liability begins. The case matters well beyond one developer: it could shape how courts, regulators and software builders treat open-source tools that can be used by both ordinary users and bad actors.
A retrial push after a split verdict
The Justice Department’s case against Storm has already produced a mixed outcome. In August 2025, a federal jury in Manhattan convicted him on one count of conspiracy to operate an unlicensed money transmitting business, but it failed to reach a unanimous verdict on the more serious charges of money laundering conspiracy and sanctions-related conspiracy. That deadlock resulted in a partial mistrial, leaving prosecutors to decide whether to abandon those counts or try again.
They have now chosen the latter path. Recent reporting indicates prosecutors asked the court to schedule a retrial in 2026, with October emerging as a proposed window after discussions over timing with the defense. The filing keeps pressure on Storm even as his legal team continues to seek acquittal on the unresolved counts through post-trial motions.
The case stems from a 2023 indictment in the Southern District of New York. Prosecutors alleged that Storm and co-founder Roman Semenov helped create and run Tornado Cash in a way that enabled the laundering of more than $1 billion in criminal proceeds, including funds tied to North Korea’s Lazarus Group. The indictment charged conspiracy to commit money laundering, conspiracy to violate US sanctions law, and conspiracy to operate an unlicensed money transmitting business.
Why Washington’s position on mixers matters
The retrial effort is drawing unusual attention because the US government’s own posture toward Tornado Cash shifted in 2025. On March 21, 2025, the Treasury Department said it had exercised its discretion to remove economic sanctions against Tornado Cash, citing a review of the legal and policy issues raised by sanctions in “evolving technology and legal environments.” That move followed litigation over whether immutable smart contracts could be sanctioned in the same way as people or entities.
That change did not amount to a declaration that Tornado Cash was harmless. Treasury’s earlier statements said the service had been used to launder proceeds from major hacks, including funds linked to Lazarus Group. But the delisting was widely read in the crypto sector as recognition that mixers and privacy-preserving tools can have legitimate uses, including protecting user anonymity and financial confidentiality.
This tension now sits at the center of the Roman Storm case. Prosecutors argue that lawful uses do not erase alleged criminal intent or alleged knowledge that the platform was facilitating illicit transactions. Defense lawyers and many crypto advocates counter that building privacy software is not the same as joining a money-laundering conspiracy, especially when the tool can be used for lawful activity.
Prosecutors push to retry Tornado Cash founder even after Washington said crypto mixers have legal uses
The phrase at the heart of this dispute captures a broader policy contradiction. On one hand, federal authorities have acknowledged the complexity of applying sanctions and enforcement tools to decentralized software. On the other, the Justice Department continues to press a criminal case that could test how far developer liability extends when code is used by third parties.
According to the 2023 indictment, Tornado Cash was not merely neutral code in the government’s view. Prosecutors said the founders profited from the service, failed to implement effective anti-money-laundering controls, and continued operating despite repeated signs that criminals were using the protocol to hide stolen funds. The government has pointed in particular to laundering tied to major crypto thefts and to North Korean cyber actors.
Storm’s supporters frame the matter differently. They argue that Tornado Cash functioned as privacy infrastructure and that punishing a developer for writing or maintaining software could chill innovation across the open-source ecosystem. That concern has resonated across parts of the crypto industry, civil-liberties circles and some legal scholars who see the case as a test of whether code authors can be held criminally responsible for downstream misuse by strangers.
The key facts in the case
Several points define the legal and policy stakes:
- Indictment unsealed: August 2023.
- Core allegations: money laundering conspiracy, sanctions conspiracy, and unlicensed money transmission conspiracy.
- Trial outcome: guilty on one count in August 2025; jury deadlocked on two counts.
- Treasury action: Tornado Cash sanctions removed on March 21, 2025.
- Current posture: prosecutors are seeking a retrial on the unresolved counts in 2026.
What is at stake for crypto, developers and regulators
For the crypto industry, the retrial could influence how privacy tools are designed and governed in the US. If prosecutors prevail on the unresolved counts, developers may conclude that building or maintaining decentralized privacy software carries substantial criminal risk when authorities can show awareness of illicit use. That could push projects offshore, encourage stronger compliance features, or deter some teams from launching privacy-focused products at all. This is an inference based on the legal posture and industry reaction, rather than a formal government finding.
For regulators and law enforcement, the case is part of a larger effort to confront crypto-enabled crime without banning innovation outright. Treasury has repeatedly tied Tornado Cash to laundering connected to some of the largest digital-asset thefts on record. From that perspective, the retrial is less about privacy in the abstract and more about whether the founders knowingly operated a service that became a critical laundering channel for sanctioned and criminal actors.
For courts, the unresolved issue is how to distinguish between protected software development and criminal participation in a financial scheme. The Fifth Circuit’s 2024 ruling in related litigation, which said immutable smart contracts are not “property” that OFAC can sanction in the ordinary sense, added momentum to arguments that software should not be treated like a traditional entity. But that ruling does not automatically resolve the criminal allegations against individual founders.
The legal arguments likely to shape the next phase
The prosecution is expected to focus on intent, control and knowledge. Its theory, reflected in prior filings and public statements, is that Storm was not a passive coder but a co-founder who understood how Tornado Cash was being used and continued to support it. Prosecutors have also argued that evidence at trial was sufficient to support conviction on the contested counts.
The defense is likely to emphasize that Tornado Cash had lawful uses, that software itself is not a criminal agreement, and that the government is stretching existing statutes to fit a decentralized technology. According to prior defense arguments, building a tool that can be misused is not the same as conspiring with criminals who later use it.
That legal divide matters because it reaches beyond crypto mixers. A broad ruling for prosecutors could affect other privacy-enhancing technologies, decentralized protocols and open-source projects whose creators do not directly control every use of their code. A ruling that sharply limits liability, by contrast, could force regulators to rely more on sanctions, civil enforcement or targeted actions against identifiable bad actors rather than protocol developers. This is a forward-looking assessment based on the issues raised in the case.
Conclusion
The decision by prosecutors to seek a retrial of Roman Storm underscores how unsettled US policy remains on crypto privacy tools. Washington has already signaled that mixers can raise legitimate legal and policy questions and, in some contexts, can serve lawful purposes. Yet the Justice Department is still pressing ahead with a case built on the claim that Tornado Cash’s founders crossed the line from software development into criminal facilitation.
The next phase of the case will likely become a defining test for the US crypto sector. It will help determine whether courts view privacy protocols primarily as neutral infrastructure, as businesses with compliance duties, or as something in between. For developers, investors and policymakers, the outcome could shape the rules of engagement for privacy-focused blockchain tools for years to come.
Frequently Asked Questions
What is Tornado Cash?
Tornado Cash is a crypto mixing service, or mixer, designed to obscure the link between sending and receiving wallet addresses, which can enhance transaction privacy. US authorities have also alleged it was used to launder proceeds from hacks and other crimes.
Who is Roman Storm?
Roman Storm is a co-founder of Tornado Cash. He was charged in 2023 in the Southern District of New York and was convicted in 2025 on one count related to operating an unlicensed money transmitting business, while the jury deadlocked on two other counts.
Why are prosecutors seeking a retrial?
They are seeking a retrial because the jury in Storm’s 2025 trial did not reach a unanimous verdict on the money laundering conspiracy and sanctions conspiracy charges, resulting in a partial mistrial.
Did the US government say crypto mixers have legal uses?
Treasury’s March 21, 2025 decision to remove sanctions on Tornado Cash reflected a review of legal and policy issues in evolving technology environments. While that did not endorse all mixer activity, it was widely interpreted as recognition that such tools can raise legitimate uses and legal complexities.
What could this case mean for the crypto industry?
The case could influence how US authorities treat developers of privacy tools, how decentralized protocols approach compliance, and how courts define the boundary between writing code and participating in criminal conduct.
When could the retrial happen?
Recent reports say prosecutors proposed a 2026 retrial schedule, with October mentioned as a possible timeframe, though the final date depends on the court and pending motions.
