- Tornado Cash developers continue to raise money for their ongoing legal defence.
- Crypto company Keyring will donate three months of fees generated by a new DeFi product.
- A team within the Ethereum Foundation is eyeing the program as a proof-of-concept for future fundraising efforts.
A new effort to fund the defence of Tornado Cash developers Roman Storm and Alexey Pertsev will serve as a “proof-of-concept” for a team within the Ethereum Foundation focusing on raising money for so-called public goods.
If the effort succeeds in raising money for the embattled developers, it could become a model for future, crypto-based efforts to fund worthwhile causes, Vinay Vasanji, the head of the Foundation’s Strategic Funding Coordination team, told DL News.
Keyring Network, a provider of verification services that rely on zero-knowledge technology, will direct three months of revenue from a new product to the developers’ defence. The product allows whitelisted institutions to privately access DeFi lending markets.
“Right from the get go, we’ve had a very close ideological alignment to what the team at Tornado was building,” Keyring CEO Alex McFarlane told DL News.
“We were shocked to see that Roman and Alexey were targeted in the way they were.”
The prosecution
Storm, Pertsev, and a third co-founder, Roman Semenov, launched Tornado Cash in 2020. The protocol is a so-called crypto mixer that makes it difficult, if not impossible, to trace the movement of digital assets across Ethereum and several other blockchains.
Prominent crypto entrepreneurs, including Ethereum co-founder Vitalik Buterin, have argued Tornado Cash provided much-needed privacy on an otherwise public ledger. Still, the protocol became popular with cybercriminals, including hackers affiliated with North Korea.
In August, jurors convicted Storm of conspiracy to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison.
Storm has vowed to fight the conviction and recently asked a federal court to dismiss the verdict as well as two other charges on which the jurors were deadlocked: conspiracy to launder money and conspiracy to evade sanctions.
Pertsev was convicted of money laundering by a Dutch court in 2024 and sentenced to five years in prison. He is appealing his conviction.
There have been two developments in his case just this week.
On Thursday, the court granted Pertsev’s request for additional investigation. The defence aims to test blockchain evidence relied on by prosecutors, according to his attorney Judith De Boer.
“The prosecution appears to rely on Chainalysis labels and clustering without providing the underlying data,” she told DL News. “The Court of Appeal has ordered additional clarification from the FIOD, will appoint an independent expert, and has referred the case back to an appellate investigative judge to ensure a thorough review.”
And on Friday, a judge granted Pertsev’s request to remove his ankle monitor.
Both developers have gone to the crypto community hat in hand, asking for donations to fund their defence. The pair count the Ethereum Foundation, Buterin, and other prominent industry players among their donors.
As of Thursday, Pertsev and Storm have raised at least 189 Ether and 799 Ether respectively, sums that were worth more than $800,000 and $3.4 million at Thursday’s prices.
It has been an enormous show of support from the industry, which, by and large, views their prosecution as a threat to the ongoing development of open-source, privacy preserving technology.
The solution
But the developers need to continue raising money as their legal travails drag on. McFarlane and Vasanji hope that Keyring’s decision to donate proceeds from a new, yield-bearing product will inspire others to follow suit and create a more durable, consistent model for crypto-based fundraising.
“One of the cool things about blockchain is it’s so openly capitalistic,” McFarlane said.
But that can make it difficult to convince institutions to part with hard-earned capital in the name of the common good — in this case, defending developers’ right to build privacy-enhancing tools like Tornado Cash.
“If you’re able to get a high yield and you’re also able to support the defense of two guys who’ve been wound up, frankly, in a political campaign against crypto, then that’s beneficial to everybody,” McFarlane said.
Keyring’s product, which it refers to as zkVerified permissioned vaults, allows pre-approved institutional and retail investors to privately deposit crypto in yield-generating “vaults.”
The process is designed to let investors access the world of decentralised finance without running afoul of the law or exposing their crypto wallets and, in turn, their onchain financial history.
Vasanji said he’s been searching for initiatives that make crypto-based fundraising more reliable.
“There isn’t a clear path for sustainable funding for public interest initiatives,” Vasanji said.
Traditional businesses that appeal to civic-minded consumers often pledge to donate a portion of their proceeds to charitable causes. One Percent for the Planet, for example, recruits businesses such as Patagonia to donate at least 1% of their revenue to environmental conservation.
Keyring’s effort differs in a key respect, according to Vasanji: Donations will happen in real-time, reducing operational and legal overhead.
“The introduction of these types of mechanisms really aligns with the increasing institutional adoption of blockchains like Ethereum,” he said.
“Really, what we’re trying to drive for is less operational and legal overhead, to donate quicker and larger pools of [money] for urgent initiatives, and to do that in a way that does not in any way change the inherent natural incentive structure that incentivizes people to use these protocols or projects in the first place.”
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.
