How Charges Against Tornado Cash Developers Could Alter Future of DeFi

Yesterday, the Department of Justice charged two tornado cash developers with helping hackers launder $1 billion including infamous North Korean Lazarus group. Roman Semenov and Roman storms were both charged yesterday by the Department of Justice with storms being arrested. There's still allegations out for Semenov. This $1 billion number just goes back to how much 20 0 cash application in which they both helped co-founded has moved over the various years since its launch in 2019 and then its relaunch in 2020. The hardest case is the debate over privacy in crypto. Can you move funds back and forth on one of these applications that swaps your crypto with another participant and sort of breaks the trail of where your crypto has been in the past. The Department of Justice thinks not and it is coming after the developers for the people who made this, of course, uh Alex Per or excuse me per uh was another developer for this application and he has been in jail in the Netherlands since last year. Uh And of course, those charges were similar money laundering, assisting to launder money, Jen. I'll throw the story over to you get your take on it. I'm going to request a fact check from our producers here. I believe he was let out of jail in April. He's awaiting trial now, but we will, we'll wait for copyright. Um Well, I think, OK, I think that this story is incredibly important for anyone who works in this industry to watch. Like the issue at the core of this is a huge one for anyone who works in D I. Anyone who deals with doos. I think last week we had a judge say that tornado doo should be seen as an entity. And so anyone working in the industry, any developer who's working with the Dow or D product I think should be watching this very closely because this is going to set precedent on whether if you are building something that is used by a bad guy to commit an alleged crime somewhere, you may be held liable and it just really blows my mind every time I see a headline come out of this, I think the fact that it's attached to the North Korean hacker group Lazarus that I think we speak about on this show at least twice a week. Um really kind of like makes it important for regulators and law enforcement and lawmakers to come down on tornado cash. But I think it's really important to highlight that. Yes, bad guys use this platform, but also a lot of good guys use it and Zach I know that you are probably going to elaborate on that because you really drive that notion home every time we talk about this. So I'm gonna pass this off to you now. OK? Pass it off to me. Yeah. The Doj here is saying, hey, just because you made this tool that can be uh that is a neutral platform for good and bad doesn't mean you can escape liability when bad happens, right? And that's a really significant blow to uh the crypto space, right? People who are making these immutable spark contracts that are often used by people doing less than good things, right? So it is, I think gonna be a uh a core tenet of the US legal system's approach to crypto enforcement going forward. Hey, just because you did this and put it out in the world, it doesn't absolve you from future actions that take place. And again, we're talking about North Korean hackers. We're talking about funding nuclear weapons development. This is big stuff that the government takes very seriously. And kind of again, goes to those big geopolitical issues that we were talking about yesterday as it relates to the future of crypto kind of unfolding here. Um Jen, I think I saw your hand that could have been just back up. No, I wasn't scratching an itch. I had it up that, that same criminal defense lawyer that was on first move this morning. I referenced in our first segment um said that the, the DOJ will have to prove intent here and he will have to prove that they knowingly facilitated these crimes for these hackers. And so it will be interesting to see what kind of arguments are used and what kind of evidence they have against the developers to prove that they knowingly facilitated uh these crimes. And so I think it will be a good one to watch. Well, but in last thoughts here, ok, I got fact checked myself. So Alexi was let go of prison or removed from prison a few months ago. He doesn't have to wear an ankle monitor. Of course, he's facing similar charges that both Romans here in those cases are also facing as of now. Uh just coming down on everybody who is attempting to help them quote unquote launder money, I think like the dock is still out on that. These are still allegations that have to be proven in court but definitely a negative look for. I think privacy when it relates to Cryptocurrency.