Arbitrum DAO votes on $1M fund for Tornado Cash devs’ legal defense

The Arbitrum DAO is voting to fund the legal defense costs of Tornado Cash’s developers. If approved, the community would donate up to ​​600,000 ARB tokens in the first year, worth nearly $1.3 million at the time of writing. 

A proposal submitted on March 7 by pseudonymous delegate DK seeks to fund a “robust legal defense” for Roman Storm and Alexey Pertsev, the developers behind the crypto mixer Tornado Cash. In addition, the funds could be used for public relations and advocacy efforts promoting awareness around privacy-preserving technologies and legal burdens for developers.

“By rallying support for their legal fund, we aim to safeguard not only the future of privacy-preserving technologies but also the broader principles of innovation, decentralization, and individual sovereignty within our industry.”

The proposal sets three tiers for voting under different funding levels, ranging from 200,000 to 600,000 ARB. To date, more than 80% of the votes have been cast for the highest tier. The deadline for voting is March 14.

The accusations against Tornado Cash and its founders revolve around the platform’s alleged role in laundering over $1 billion in illicit funds, including money linked to the North Korean hacking organization Lazarus Group. As a result, Tornado Cash has been subject to significant legal actions, including its addition to the United States sanctions lists, effectively banning residents in the country from using the service and sparking controversy within the cryptocurrency community​.

Supporters of Tornado Cash argue that the platform merely provides software for decentralized money transmission and does not directly engage in money transmission itself, which challenges the basis of the charges against its developers. According to the crypto advocacy group Coin Center, the Financial Crimes Enforcement Network (FinCEN) guidelines state that an anonymizing software provider should not be considered a money transmitter.

Storm and Pertsev face several charges from U.S. authorities, including conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money-transmitting business.

The first two charges can each carry a maximum sentence of 20 years in prison, while the charge for operating an unlicensed money-transmitting business is punishable by up to five years in prison​.

“These [legal] challenges not only threaten the developers’ ability to continue their work but also undermine the fundamental principles of decentralization and individual freedom upon which projects with privacy-preserving technologies are built.”

The community proposal comes just a few days after the crowdfunding platform GoFundMe canceled a fundraiser dedicated to collecting legal fees for Storm and Pertsev, citing a breach of their terms of service that could “expose GoFundMe, its employees or Users to any harm or liability of any type.”

Magazine: Tornado Cash 2.0 — The race to build safe and legal coin mixers