This article was compiled and organized by BlockWeeks
On August 6, a federal court jury in Manhattan, USA, delivered a split verdict in the case of U.S. v. Roman Storm. The 36-year-old developer Roman Storm was found guilty of "conspiracy to operate an unlicensed money transmitting business," but the jury was unable to reach a unanimous decision on the two charges carrying much heavier sentences—money laundering conspiracy and sanctions evasion—and the judge declared a mistrial on those counts.
The charge on which he was convicted carries a statutory maximum penalty of 5 years in prison. Judge Katherine Polk Failla allowed Storm to remain free on the $2 million bail he posted before trial, and prosecutors have not yet indicated whether they will retry the two mistried charges. No sentencing date has been set either.
Prosecutors alleged that Storm, who participated in launching the Ethereum privacy application Tornado Cash in 2019, helped launder more than $1 billion in stolen crypto assets, including funds linked to North Korea's Lazarus Group, and said his marketing materials compared the service to "a giant washing machine." Storm's defense lawyers countered that Tornado Cash is open-source, non-custodial software that runs autonomously; they argued that the case threatens the right to publish code, and that developers cannot police how strangers use these privacy tools after the tool has been deployed.
The Battle Over "Code Is Speech" and FinCEN Guidance
Classifying Tornado Cash as a money services business (MSB) is puzzling. First, Tornado Cash never held customer funds, charged no subscription fees, and had no corporate organizational form; second, the U.S. Financial Crimes Enforcement Network (FinCEN)'s 2019 guidance was widely interpreted as meaning that non-custodial software developers merely "provide delivery, communication, or network access services" by publishing software, and are therefore excluded from MSB registration obligations. The industry think tank Coin Center has extensively argued this point. This interpretation itself is disputed, and the U.S. Department of Justice (DOJ) takes a different position. The jury this time accepted the DOJ's view—that neutral code distribution can also constitute unlicensed money transmission—which ignores the line between custodial and non-custodial applications and blurs the distinction between speech and services.
Still, there is a glimmer of light: prosecutors failed to convince the jury that Storm conspired to launder money or violated sanctions. This outcome damages the DOJ's reputation and leaves open the possibility that the two mistried charges will be dropped.
In addition, the DOJ's insistence on pursuing this case and advancing these claims in court shows that anti-money laundering, the Bank Secrecy Act (BSA), and other illicit finance issues are among the few areas where the Trump administration has not yet shifted its stance on the crypto industry. Last week's report by the "President's Working Group on Digital Asset Markets" also confirms this: the report proposed major industry-friendly reforms on a range of issues including market structure, tax treatment, and DeFi, but did not specifically support reforming the Bank Secrecy Act or its enforcement approach. (It is not that no one within the government has spoken out: SEC Commissioner Hester Peirce, in a speech on Monday, offered one of the strongest rebuttals of the Bank Secrecy Act by a government official to date.)
Ultimately, holding open-source developers responsible for the actions of unknown users will set a dangerous precedent. If publishing decentralized code can retroactively constitute a licensing violation, then every engineer who improves internet privacy tools must worry about whether some malicious user (and a creative prosecutor) could send them to prison. If the industry wants to continue pushing back against these interpretations, it should treat this case as a wake-up call: strengthen legal defenses, push for clear statutory safe harbors (such as the Blockchain Regulatory Certainty Act, BRCA, which explicitly exempts non-custodial developers from MSB registration and has been incorporated into the CLARITY Act passed by the House last month), and redouble emphasis on the fact that privacy infrastructure is as fundamental to the internet as encryption itself.
SEC Gives a More Nuanced New Position on Liquid Staking
On Tuesday, the U.S. Securities and Exchange Commission (SEC) said it has determined that "certain" liquid staking activities on proof-of-stake (PoS) networks are not subject to securities laws. This clarification came two months after the SEC commented on protocol staking activities—at that time, the SEC had already stated that staking activities including solo staking, self-custodial staking directly with third parties, and staking through custodial arrangements do not involve the offer and sale of securities. Now, whether protocol staking or liquid staking, participants no longer need to register with the SEC under the Securities Act.
The SEC's statements on protocol staking and liquid staking mark a major shift in its regulatory approach and clear away some of the regulatory cloud hanging over liquid staking tokens (LSTs), an asset class that has long been questioned.
Crypto M&A Heats Up: Phantom Acquires SolSniper, Ripple Takes Rail
M&A activity in the digital asset space continues to accelerate. This week, Phantom disclosed its acquisition of SolSniper—a high-speed trading and analytics platform built on Solana; Ripple announced an agreement to acquire Rail, a cross-border payment network built around stablecoins.
SolSniper is Phantom's third acquisition since 2024, following its purchases of embedded wallet infrastructure Bitski and security tool Blowfish. If the first two acquisitions were aimed at making the Phantom wallet easier to use and more secure, then the acquisition of SolSniper continues Phantom's transformation from a pure wallet service provider into a "comprehensive consumer finance platform." In July of this year, Phantom integrated Hyperliquid's perpetual contracts directly into the wallet, greatly lowering the threshold for users to access contract products and opening up a new product line. Now, with SolSniper, Phantom is targeting Solana's memecoin market—which often accounts for more than half of Solana's monthly DEX trading volume and contributes most of Solana's revenue.
Ripple's $200 million acquisition of Rail will give it virtual account infrastructure and compliance channels, thereby broadening distribution channels for its RLUSD stablecoin. This deal follows Ripple's $1.25 billion bid for prime broker Hidden Road in April of this year, as well as its earlier acquisitions of institutional custodian Metaco and Standard Custody & Trust, bringing its cumulative spending on strategic acquisitions to more than $3 billion. Ripple reportedly also offered $4 billion to $5 billion to acquire Circle, but the stablecoin giant ultimately went public in July. Galaxy Digital led Rail's Series A funding round in 2024.
The heating up of crypto-related M&A is undoubtedly the result of a more friendly regulatory environment under the Trump administration, as well as the accelerated adoption and integration of crypto-native products such as stablecoins. This new environment is further stimulating the industry's appetite for consolidation.
