Key Points:
- The U.S. Department of Justice has signaled a shift in its legal approach toward decentralized finance (DeFi) developers, emphasizing that creators of neutral, decentralized software should not face criminal liability for misuse by third parties.
- Acting head of the DoJ’s criminal division, Mathew Galeotti, stated that prosecution should target individuals who misuse tools, not the developers who build them in good faith.
- This policy clarification emerged during the American Innovation Project Summit in Wyoming and marks a significant departure from previous enforcement actions.
- Roman Storm, founder of Tornado Cash, was recently convicted under U.S. Code 1960(b)(1)(C), which targets unlicensed money transmission involving illicit funds—despite Tornado Cash being a non-custodial, decentralized protocol.
- Legal experts argue that the conviction contradicts the newly articulated DoJ stance, raising questions about the consistency and fairness of the government’s enforcement strategy.
- Prominent figures in the crypto legal community, including Jake Chervinsky and Paul Grewal, have called for the dismissal of Storm’s case based on the updated guidance.
- The DoJ’s new position applies specifically to software that is fully decentralized, automates peer-to-peer transactions, and does not involve third-party custody of user assets.
- The tension between past convictions and current policy signals a potential turning point in how regulators engage with decentralized technologies.
A Shift in Legal Philosophy: Accountability in the Age of Decentralization
The landscape of digital innovation is evolving rapidly, and so too must the legal frameworks that govern it. For years, regulators have struggled to apply traditional legal doctrines to emerging technologies, often stretching existing statutes beyond their intended scope. Now, a notable pivot appears to be underway within the Department of Justice. Mathew Galeotti, currently leading the criminal division, has publicly articulated a more nuanced understanding of software development in decentralized environments. His remarks suggest a growing recognition that holding developers criminally liable for how others use open-source tools undermines innovation and misplaces accountability.
This evolving stance challenges long-standing assumptions in federal enforcement. In the past, prosecutors treated certain decentralized applications as if they were centralized financial institutions, applying regulations designed for banks and money transmitters to autonomous code. Galeotti’s comments reject that analogy. He emphasized that when software operates without human intervention, lacks control over user funds, and functions as a neutral conduit for transactions, the developer should not bear criminal responsibility for downstream abuse. This principle aligns with broader legal traditions that protect toolmakers—from manufacturers of locks to creators of encryption software—when their products are misused by bad actors.
The Contradiction in the Tornado Cash Case
Despite this newly clarified position, a glaring contradiction remains in the case of Roman Storm. Storm, a software developer behind Tornado Cash, was recently convicted under a statute that prohibits unlicensed money transmission involving illicit proceeds. The charges stemmed from the use of his protocol by individuals engaged in illegal activity, even though Storm himself had no access to user funds, did not operate the platform after deployment, and played no role in any specific transaction. The system was designed to function autonomously, relying on smart contracts to obscure transaction trails—a feature common in privacy-focused blockchain tools.
Critics argue that convicting Storm sets a dangerous precedent. If the DoJ now claims it will not pursue developers of truly decentralized protocols, then the legal basis for Storm’s conviction appears fundamentally flawed. His case was built on the assumption that creating a tool capable of misuse equates to facilitating crime—a logic that, under the new guidance, should no longer hold. The timing of Galeotti’s statement intensifies scrutiny on the decision to prosecute, especially since the conviction occurred after the government had allegedly adopted a more developer-friendly posture.
Legal Experts Demand Consistency and Justice
The crypto legal community has reacted swiftly to the dissonance between the DoJ’s current statements and its past actions. Jake Chervinsky, a leading voice in blockchain law and legal advisor at a prominent crypto investment fund, has been particularly vocal. He contends that if the DoJ’s new policy is genuine, then Storm’s conviction cannot stand. According to Chervinsky, maintaining the verdict would expose the government’s position as inconsistent, if not hypocritical. He insists that justice requires the immediate dismissal of charges, not merely as a remedy for one individual, but as a signal that the rule of law applies equally—even in the complex terrain of digital finance.
Similarly, Paul Grewal, chief legal officer at a major cryptocurrency exchange, has echoed these concerns. Grewal highlighted that the foundational premise of decentralized technology is the removal of centralized control. To punish a developer for outcomes they cannot influence contradicts both technical reality and legal fairness. His commentary underscores a broader demand: that enforcement agencies base their actions on actual control and intent, not on the mere existence of a tool that someone, somewhere, might exploit. The growing chorus of legal professionals suggests that Storm’s case may become a flashpoint in the struggle to define accountability in the digital age.
Implications for the Future of Tech and Law
The implications of this shift extend far beyond one courtroom or one protocol. How governments treat software creators shapes the future of technological innovation. If developers fear prosecution for the unintended consequences of their work, they may avoid building tools that enhance privacy, security, or financial autonomy—features that are essential to a free and open digital society. The DoJ’s revised stance, if consistently applied, could encourage a new wave of experimentation by reducing the legal risks associated with creating decentralized systems.
Moreover, this moment forces a reevaluation of how laws written for a pre-digital era apply to modern technologies. Statutes like 1960(b)(1)(C) were crafted with human-operated financial services in mind, not self-executing code on a blockchain. Applying them to decentralized software stretches their meaning beyond recognition. The DoJ’s acknowledgment of this distinction suggests a maturation in regulatory thinking—one that recognizes code as speech, tools as neutral, and intent as central to criminal liability. Whether this insight leads to systemic reform or remains an isolated comment will determine the trajectory of digital rights in the United States.
Conclusion
The Department of Justice’s recent clarification marks a pivotal moment in the legal treatment of decentralized technology. By affirming that developers should not be punished for the misuse of neutral, non-custodial software, the agency has taken a step toward aligning law with technological reality. Yet, the continued prosecution and conviction of Roman Storm under the very framework the DoJ now claims to reject exposes a critical gap between policy and practice. If the government is to maintain credibility, it must reconcile its actions with its stated principles. The outcome of Storm’s appeal may well define whether the U.S. supports innovation through fair legal standards—or continues to conflate creation with culpability.
