Venture capital firm Paradigm and the Ethereum Foundation have intensified their support for Tornado Cash co-founder Roman Storm ahead of his July 2025 trial on money laundering charges. The moves highlight growing industry pushback against what crypto advocates call an overreach in applying financial regulations to open-source software developers.
Paradigm filed an amicus brief arguing prosecutors must prove Storm directly controlled user funds to convict him of operating an unlicensed money transmitter. This comes as the Ethereum Foundation pledged $500,000 to Storm’s defense fund, with promises to match another $750,000 in community donations.
The combined support brings total legal funding for Storm to approximately $3 million, including earlier contributions from crypto advocacy groups. Storm remains under house arrest in Washington state on $2 million bail since his August 2023 arrest.
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Paradigm’s Legal Arguments
In its June 13 court filing, Paradigm’s legal team emphasized that Tornado Cash’s non-custodial architecture means developers never controlled user assets. The brief cites:
- 2014 Treasury Department guidance separating software development from money transmission
- Requirement to prove Storm knowingly facilitated specific illegal transactions
- Absence of fees charged for basic Tornado Cash services
Ethereum Foundation’s Financial Support
The Foundation’s $500,000 donation marks its first direct involvement in the case. Executive director Aya Miyaguchi stated: “This isn’t just about Roman – it’s about protecting open-source development principles critical to Web3 innovation.” The organization will match public contributions through July 1, creating a potential $1.25 million war chest.
Tornado Cash Technology Under Scrutiny
Prosecutors allege the mixing service processed over $1 billion in illicit funds, including $455 million for North Korea’s Lazarus Group. Defense attorneys counter that:
| Protocol Feature | Legal Argument |
|---|---|
| Automated smart contracts | No ongoing developer control |
| Open-source code | Protected speech under 1st Amendment |
| Decentralized governance | No single entity operates service |
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Market Impact
The case’s outcome could reshape regulatory approaches to decentralized finance. Privacy coin valuations showed muted response, with Zcash (ZEC) trading flat at $28.14 and Monero (XMR) dipping 2.3% to $144.76 following the news.
- Amicus Brief
- A legal document filed by non-litigants with strong interest in a case’s outcome.
- Non-Custodial
- Financial services where providers don’t hold users’ assets.
- Money Transmitter
- Businesses that transfer funds on behalf of others, requiring state licenses.
- Lazarus Group
- North Korean state-sponsored hacking collective sanctioned by OFAC.
