Prosecutors Push to Retry Tornado Cash Co-Founder Even as Washington Softens on Crypto Privacy

The Tornado Cash contradiction

This contradiction has been building for a while.

In November 2024, a U.S. appeals court overturned the Treasury Department’s 2022 sanctions against Tornado Cash, ruling that OFAC had exceeded its authority because Tornado Cash’s immutable smart contracts did not qualify as property under the law used to sanction them. The court’s reasoning did not bless criminal use of mixers, but it did draw a hard line around how far the government can stretch old laws over autonomous code.

That ruling was a major win for the argument that software itself is not always sanctionable in the way a person, company, or asset might be. Still, it did not end the broader campaign against Tornado Cash-linked developers. Alexey Pertsev was convicted in the Netherlands in May 2024 and sentenced to 64 months, while Roman Storm remains in the U.S. legal crosshairs.

So the legal environment has become deeply fragmented.

Courts are questioning whether code can be treated like sanctionable property. Treasury is now acknowledging lawful privacy use. Yet prosecutors still appear ready to push a theory of liability that many in crypto fear could criminalize open-source development itself.

Why crypto should care

This is bigger than Tornado Cash.

If prosecutors can persuade a jury that building or helping maintain privacy-preserving code amounts to criminal conspiracy because bad actors used it, the chilling effect could spread far beyond mixers. It could hit DeFi tools, wallet infrastructure, zero-knowledge privacy layers, and other neutral software that sits uncomfortably between lawful use and illicit abuse. That broader concern has been central to the debate around Storm’s case.

At the same time, the Treasury language suggests institutions and regulated firms are starting to make a more mainstream case for privacy. CryptoSlate notes that public blockchain usage has grown sharply, with Treasury reporting 3.8 billion successful monthly transactions in early 2025, up 96% year over year. The more economic activity moves onchain, the harder it becomes to argue that full transparency is always practical or safe for lawful users.

That is the next battlefield.

The question is no longer whether privacy has legal uses. Treasury has effectively conceded that it does. The real question is who gets to provide that privacy and under what conditions. Licensed, compliant intermediaries may get room to operate. Permissionless, decentralized privacy protocols may remain under heavy pressure.

The FOMO Daily take

This case is becoming a referendum on where America draws the line between privacy infrastructure and criminal facilitation.

The market should not read Treasury’s softer language as a blanket green light for privacy coins, mixers, or DeFi obfuscation tools. The Storm retrial push shows the enforcement risk is still very real, especially where prosecutors believe a protocol became a laundering highway.

But the opposite is also true.

The government can no longer pretend every privacy tool exists only for criminals. It has now acknowledged legal, everyday reasons for people and businesses to want confidentiality on public ledgers. Once that admission is in the record, the old narrative gets harder to sustain.

That is why this story matters.

Roman Storm’s retrial is not just about one defendant. It is about whether the next generation of crypto developers will build privacy tools in the United States or decide the legal risk is too high. It is about whether compliant privacy becomes a real product category or stays trapped between political rhetoric and selective enforcement. And it is about whether Washington’s crypto reset actually includes civil liberties, or just friendlier branding around the same old crackdowns.

Bottom line, Washington has finally admitted crypto mixers can have lawful uses. Now prosecutors want to retry one of the most high-profile developers associated with them.

That is not a small contradiction. It is the contradiction that may define crypto privacy policy for the next few years