Storm’s Tornado Cash Trial Tests DeFi Compliance
Roman Storm, co-founder of Tornado Cash, is on trial in the Netherlands on US money laundering charges tied to the crypto mixer. Prosecutors allege he exercised direct control over Tornado Cash operations, citing blockchain forensics—server logs, emails, governance records—and transfer analyses from major exchanges like Crypto.com and Binance. Storm’s defense insists Tornado Cash is decentralized open-source software, challenging attribution methods and expert credentials, and plans to call medical witnesses, a Chainalysis expert, and a romance scam victim who claims her funds never entered the mixer. This landmark case tests DeFi compliance and mixer liability, with analysts warning of short-term ETH and privacy token volatility. In the long run, the verdict could reshape Ethereum-based service standards, driving clearer governance models and higher risk premiums for mixer platforms.
Bearish
The Roman Storm trial increases regulatory uncertainty around Tornado Cash and similar mixers, likely causing short-term selling pressure on ETH and privacy tokens as traders brace for heightened compliance risks. Historical precedents show that legal scrutiny of DeFi protocols often leads to market volatility and reduced liquidity. Over the long term, mandated governance improvements and risk premiums may stabilise the sector but could also limit adoption and reduce token demand, reinforcing bearish sentiment.