Arbitrum DAO Pulls the Plug on Tornado Cash Legal Fund Proposal

Last Updated on March 11, 2024

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Key Takeaways:

  • The Arbitrum DAO withdrew a proposal to fund the legal defense of Tornado Cash developers Roman Storm and Alexey Pertsev, initially aimed at allocating $1.3 million in ARB tokens for their support.
  • The retraction of the proposal was at the request of the anonymous author, DK, leaving the reasons for this decision undisclosed.
  • Tornado Cash is accused of laundering over $1 billion, including funds connected to the Lazarus Group.
  • The legal challenges for Tornado Cash developers intensified with the arrests of Pertsev in August 2022 and Storm in August 2023, while co-founder Roman Semenov remains fugitive.
  • A GoFundMe campaign for the developers’ legal fees was canceled, citing a breach of terms that could risk harm or liability to the platform or its users.

An Arbitrum representative confirmed the withdrawal of a funding proposal for the Tornado Cash developers’ legal defense, initiated by the proposer’s request.

This proposal, aimed at allocating approximately $1.3 million in ARB tokens from the community’s reserves, was intended to support Roman Storm and Alexey Pertsev, key figures behind the controversial crypto mixer Tornado Cash, in their legal battles. The funds were also earmarked for public relations and advocacy for privacy-focused technologies.

Arbitrum DAO campign for legal defense
Arbitrum DAO campaign for the legal defense of Storm and Pertsev. Source: Arbtirum DAO

The proposal, introduced by an anonymous entity known as DK on March 7, emphasized the necessity of a “robust legal defense” for the implicated developers. However, following the author’s decision, the proposal was retracted, leaving the reasons for this action undisclosed.

Attempts to reach DK for comments have so far been unfruitful.

Tornado Cash and its creators have faced accusations of facilitating the laundering of over $1 billion in illicit proceeds, some of which are tied to the notorious Lazarus Group. The U.S. has leveled multiple charges against the developers, including money laundering, sanctions breaches, and operating an unlicensed money transmission service.

An investor's analyzing the Tornado Cash TORN coin on screen

The arrest of Pertsev in August 2022 in the Netherlands and Storm’s subsequent apprehension by the FBI in August 2023 highlight the legal pressures faced by the Tornado Cash team. Roman Semenov, another co-founder, is currently evading capture.

Advocates for Tornado Cash argue that the service merely offers tools for decentralized financial transactions without directly participating in these transactions. The legal scrutiny surrounding Tornado Cash has raised concerns about the broader implications for developers of privacy-centric technologies.

Dirty bitcoins go through Tornado Cash and become clean

In another blow to their legal fund efforts, a GoFundMe campaign intended to raise money for Storm and Pertsev’s legal expenses was terminated on February 16, 2024.

GoFundMe justified the cancellation by citing a violation of their terms that could potentially endanger the platform, its employees, or users.

GoFundMe terms and conditions number 22
Number 22 of GoFundMe’s Terms and Condtions. Source: GoFundMe

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