Ethereum Foundation Donates $1.25 Million to Support Tornado Cash Developer’s Legal Defense

The Ethereum Foundation has announced a $1.25 million donation to support the legal defense of Tornado Cash developer Alexey Pertsev.  This development follows Pertsev’s release from jail to prepare for his appeal. Pertsev, one of the developers behind the privacy-focused protocol Tornado Cash, had been sentenced to 64 months in a Dutch prison on money laundering charges. In its statement announcing monetary support for Pertsev's defense, the Ethereum Foundation affirmed its stance on digital privacy and the rights of developers. It stated, “Writing code is not a crime, and privacy is a fundamental right.”  https://twitter.com/ethereumfndn/status/1894704611606385012 Recall that in December 2024, Ethereum co-founder Vitalik Buterin also contributed 50 ETH—valued at approximately $170,000 at the time—to assist with the legal expenses of both Pertsev and his fellow Tornado Cash developer, Roman Storm. Ethereum Foundation Pledges Support In 2024, Pertsev was convicted after authorities alleged that he failed to prevent illicit transactions on Tornado Cash. The indictment accused him of enabling money laundering activities by facilitating anonymous transactions on the blockchain. Dutch prosecutors argued that he should have anticipated the misuse of the protocol. Meanwhile, the case against Tornado Cash has raised concerns about the legal treatment of software developers. Prosecutors have sought to establish criminal liability for developers based on how third parties use their software.  The Ethereum Foundation’s contribution follows a similar move by Paradigm, whose co-founder Matt Huang pledged $1.25 million to support Roman Storm in his legal battle. https://twitter.com/ethereumfndn/status/1894704611606385012 Software Development Criminalization Notably, Storm is facing charges bordering on operating an unlicensed money-transmitting business and conspiracy to commit money laundering. He has warned of wider consequences for developers. He stated that the case could set a precedent criminalizing software development and impacting the broader tech industry. Facing up to 45 years in prison, Storm noted that developers have already been discouraged from releasing new software due to legal fears. Notably, a recent lawsuit against the U.S. Department of Justice (DOJ) highlighted concerns that the prosecution of Storm has created a chilling effect. The lawsuit seeks relief for developers who are hesitant to launch new projects due to the potential legal risks.  Court Ruling Challenges Treasury’s Authority Notably, in November, a ruling by a federal court determined that the U.S. Treasury overstepped its authority by sanctioning Tornado Cash. The decision stated that Tornado Cash’s smart contracts do not constitute “property” under federal law, rendering them ineligible for sanctions. The court emphasized that these contracts' open-source and immutable nature means they cannot be owned or controlled. Previously, legal experts, including former presidential candidate Vivek Ramaswamy, had criticized the Treasury’s approach. In a panel discussion, Ramaswamy argued that penalizing an entire protocol rather than targeting individual bad actors was unconstitutional.