The cryptocurrency community is calling for the charges against Roman Storm to be dropped following the new statement from the U.S. Department of Justice regarding DeFi developers' liability.
The U.S. Department of Justice confirms that it will not prosecute decentralized software developers for third-party criminal acts on the platform, causing significant controversy in the cryptocurrency community and among crypto lawyers.
MAIN CONTENT
The U.S. Department of Justice changes its stance, not pursuing criminal liability for DeFi developers for illegal acts carried out by third parties.
The Roman Storm case is emblematic of developers being convicted for creating neutral software; now the community is calling for the penalty to be dropped based on new guidance.
Legal experts and leaders in the cryptocurrency industry have differing views, creating a debate about the prosecutorial norms in this area.
Will the U.S. Department of Justice still prosecute DeFi developers for third-party errors?
Recently, the U.S. Department of Justice (DoJ) announced that it will not prosecute decentralized software developers if there is no criminal intent and if a third party misuses the platform, that party will be held responsible under the law.
At the American Innovation Project conference in Wyoming, Mathew Galeotti, Acting Head of the Criminal Division of the Department of Justice stated: neutral tool developers with no intent to commit a crime should not be prosecuted if a third party misuses that software for malicious purposes.
"Essentially, neutral tool developers with no intent to commit crimes should not be held responsible for a third party's misuse. If a third party violates criminal law, prosecute them — not the well-intentioned developer."
Mathew Galeotti, Acting Director of the Criminal Division of the U.S. Department of Justice, 2024, justice.gov
This stance is seen as an important shift, especially for the DeFi ecosystem, promoting digital innovation by reducing legal risks for developers.
Who is Roman Storm and what is his connection to the case?
Roman Storm is the founder of the Tornado Cash project, a cryptocurrency mixing tool that helps protect user privacy but has also been accused of facilitating illegal money laundering.
Storm was indicted under 18 U.S.C. § 1960(b)(1)(c), which prohibits organizations from transmitting money without a license related to criminal activity. Although Tornado Cash is decentralized automation software, Mr. Storm was still convicted.
The legal issue is prominent in that developers are accused solely for creating software that a third party uses for illegal acts, which the new stance from the Department of Justice refutes.
How does the new stance of the Department of Justice affect the future of the Roman Storm case?
The new stance could significantly reverse the outcome of the Roman Storm case, as the previous argument was the basis for his conviction.
"When evidence confirms that the software is indeed decentralized and only automates peer-to-peer transactions, with no third party having control or the right to hold assets, then prosecution under 18 U.S.C. § 1960(b)(1)(C) will not be approved against the developer."
Mathew Galeotti, Acting Director of the Criminal Division of the U.S. Department of Justice, 2024, justice.gov
Legal experts in the cryptocurrency field point out that, with this principle, the Storm case should be reconsidered or dismissed. This is a key point that is creating significant pressure on U.S. prosecution, especially in the context of strong public and community opposition.
The Tornado Cash case is becoming a litmus test for the legal approach to fully automated DeFi protocols, where developers do not intervene in users' actual transaction decisions.
How do the expert community, CEOs, and lawyers react?
The Department of Justice's recent statements have sparked a wave of calls for justice for Roman Storm from experts, founders, and legal councils of major entities in the cryptocurrency industry.
"Roman Storm has just been convicted under this statute under these circumstances. Justice for Roman means dismissing the case."
Jake Chervinsky, Legal Director of Variant Fund, 2024, x.com
In agreement with this view, Paul Grewal, Chief Legal Officer of Coinbase, also argues that the penalties need to be reconsidered under the new guidance, emphasizing the principle that developers should not be prosecuted merely because a third party abuses the automated system.
"The Department of Justice's statement is very clear. Developers of decentralized software should not be convicted without evidence that they control the assets or have criminal intent."
Paul Grewal, Chief Legal Officer of Coinbase, 2024
Although the majority of experts support it, there is still internal debate within the industry about the limits of DeFi developers' liability, indicating a lack of complete consensus and the need to base it on specific cases.
Will the ruling for Roman Storm be overturned on appeal?
Currently, pressure is mounting on U.S. prosecutors to defend their ruling at the upcoming appellate court hearing. Experts predict that with new guidance, there is a strong likelihood of requesting the indictment against Roman Storm to be dropped.
The cryptocurrency community continues to call for a review of the case, arguing that the legal framework needs to adapt to the technical characteristics and decentralization of new protocols, in line with international standards for innovation.
"The Department of Justice's progress is necessary for the U.S. not to fall behind in the global financial technology innovation race."
Report from American Innovation Project, 2024
However, the final decision regarding Roman Storm's legal fate remains unclear, depending on the next moves of U.S. authorities and community pressure.
Conclusion: Practical implications for the DeFi development community
The new stance of the U.S. Department of Justice opens up hope for DeFi developers for a transparent environment that encourages innovation with less legal risk as third-party errors are no longer held to unreasonable responsibility.
Criteria Before new stance After new stance DeFi developer responsibility May be prosecuted if software is abused Only prosecute if there is clear criminal intent Legal protection against third-party actions Hard to determine boundaries Third party bears primary responsibility Impact on technological innovation Reduces development incentive Encourages more creativity
Resolving the Roman Storm case will be an important precedent, guiding global financial technology law regarding the role of developers in a decentralized DeFi environment.
Frequently Asked Questions
Will DeFi developers be prosecuted if the platform is misused by a third party?
No, if the developer does not control the assets and does not intend to commit a crime, the responsibility lies with the third party. According to the new guidelines from the U.S. Department of Justice.
What is the content of the Roman Storm case?
Roman Storm was indicted for developing Tornado Cash, software alleged to assist in money laundering, even though he did not directly commit the crime.
How does the Department of Justice's new statement affect the Storm case?
The new guidance supports not prosecuting developers when the platform is truly decentralized, increasing hopes of reversing the ruling against Roman Storm.
How does the cryptocurrency community react?
The community and many legal experts are calling for the indictment against Storm to be dropped, arguing that this is a fair decision that promotes innovation.
What distinguishes valid and invalid prosecution for DeFi developers?
Prosecution is only valid when there is criminal intent or proof of control over the system — not merely based on developing a neutral tool.
Could this new stance become a global standard?
This stance is seen as progressive and could set an international precedent in protecting decentralized software developers from unreasonable legal risks.
Has a final decision been made for Roman Storm?
There is currently no final decision; everything awaits the next legal move from the authorities and the outcome of the appeal.
Source: https://tintucbitcoin.com/doj-doi-y-vu-roman-storm/
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