In the weeks leading up to the federal trial of Roman Storm, the co-founder of Tornado Cash, venture capital organization Paradigm has submitted an amicus brief throwing their weight behind Storm.

The trial, which is due to be held next month, centers around whether or not writing and publishing decentralized software is legally equated with running a money-transmitting business. The outcome of the case may set a dangerous precedent surrounding the relationship between code authorship and criminal liability.

Setting the Scene of the Case

Roman Storm was charged under 18 U.S.C. § 1960 for allegedly overseeing money laundering services and operating as an unregulated money transmitter via the Tornado Cash platform. The US government claims Storm promoted and utilized Tornado Cash to obfuscate cryptocurrency transactions. This is a claim that venture capital firm Paradigm vehemently denies on Storm’s behalf. Indeed, Paradigm states that Tornado Cash is a non-custodial platform, acting autonomously and with full decentralization after deployment.

Paradigm’s involvement stems from its belief that software developers and coders must not be held liable in the eyes of federal law for open-source code that they do not directly monetize or own.

Why Paradigm is on Roman Storm’s Side

Paradigm brought up an historic piece of guidance from FinCEN dating back to 2019 and 2014, concluding that software creation – including tools with financial use cases – doesn’t amount to an “acceptance and transmission of value”. Based on this guidance, only those who handle assets, accept fees or retain control over such assets should be subject to money-transmission laws.

Paradigm believes a jury must be able to prove beyond reasonable doubt that Roman Storm knowingly conducted an ongoing commission-based money transmitter business. They must also prove he benefited financially from the enterprise and knowingly handled illicit gains.

Fears for the Future of Open-Source Innovation

There’s also concerns within Paradigm and the wider crypto community that innovation could be curbed considerably if Storm is found guilty. Paradigm’s legal leads, Katie Biber and Gina Moon, fear that any new precedent could render developers at risk of penalization for code use, “even if they are applying widely-shared and accepted regulatory guidance”. This could have severe ramifications for the crypto and fintech space, with innovators more inclined to seek blockchain legal services for support on the way forward with Web3 activity. Developers will also need legal assistance within the wider open-source and AI-led landscape.

If the creation of such decentralized tools and software does indeed fall at risk of a felony, software developers will immediately think twice about dabbling in ground-breaking technologies and pushing the boundaries in niches such as decentralized finance (DeFi), privacy, and artificial intelligence.

All eyes will be on this trial, which is scheduled to commence from July 14, 2025. There will be immense scrutiny on several aspects of the trial, not least whether or not the court adopts Paradigm’s request for clear jury instructions. It will also be fascinating to see how the defense lawyers can distinguish between control and custody of assets and outright code publishing.

The result of this case could set a new legal environment that either enshrines software developers or leaves them exposed to criminal liability based on the actions of others. Watch this space.