Arbitrum Community Reverses Decision on Funding Tornado Cash Developer Legal Defense

Ruholamin Haqshanas
Last updated: | 2 min read
Arbitrum Community Reverses Decision on Funding Tornado Cash Developer Legal Defense

The Arbitrum decentralized autonomous organization (DAO) has retracted a proposal that aimed to provide financial support for the legal defense costs of Tornado Cash’s developers.

The proposal, which called for the allocation of approximately $1.3 million worth of Arbitrum (ARB) tokens from the community wallet, intended to assist Roman Storm and Alexey Pertsev, the developers behind the crypto mixer Tornado Cash. 

The allocated budget could have also been used for public relations and advocacy efforts to promote privacy-preserving technologies.

“By rallying support for their legal fund, we aim to safeguard not only the future of privacy-preserving technologies but also the broader principles of innovation, decentralization, and individual sovereignty within our industry,” the proposal read. 

The pseudonymous delegate DK initiated the proposal on March 7, advocating for a strong legal defense for the developers. 

However, the user has since removed the proposal without providing any reasons. 

Tornado Cash Developers Face Money Laundering Charges

Tornado Cash and its founders face allegations of laundering over $1 billion in illicit funds, including money associated with the hacking group Lazarus Group. 

The developers have been charged by the United States with offenses such as money laundering, sanctions violations, and operating an unlicensed money transfer business.

While supporters of Tornado Cash argue that it merely provides software for decentralized money transmission and does not engage directly in money transmission, the crackdown on the platform has been viewed as a potential threat to developers working on privacy-oriented applications.

In addition to the withdrawal of community funding, the developers have encountered other financial setbacks. 

A crowdfunding campaign on GoFundMe, intended to collect legal fees for Storm and Pertsev, was canceled on February 16 due to a breach of the platform’s terms of service that could expose GoFundMe, its employees, or users to potential harm or liability.

As reported, the US Treasury has added Tornado Cash to its Specially Designated Nationals list, effectively banning Americans from using this mixer. 

The Department claimed that the mixer “has been used to launder more than $7bn worth of virtual currency since its creation in 2019.” 

Storm Asked For Support Against Money Laundering Charges

Earlier this year, Storm sought support from right-to-privacy advocates in anticipation of his upcoming criminal trial.

The crypto veterran faces three charges, including conspiracy to commit money laundering, operating an unlicensed money-transmitting business, and violating the International Emergency Economic Powers Act. 

His trial is scheduled for September 2024, and he has pleaded not guilty to the charges.

At the time, Storm said that his legal team is preparing a strong defense for his September 2024 trial. 

“Whether you’re [a] passionate developer like me involved with Web3 or just care about software and privacy, this legal battle will affect you. This case will set a major precedent for years to come,” he said. 

Storm, indicted in August 2023, is out on a $2 million bond and has emphasized the case’s potential implications for Web3 developers and individuals concerned about software and privacy.