By Luc Cohen

Representations of cryptocurrencies are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File photo Purchase Licensing Rights , opens new tab

NEW YORK, August 6 (Reuters) – A U.S. jury deadlocked on Wednesday on money laundering and sanctions evasion charges against the founder of Tornado Cash , opens new tab, a firm that makes cryptocurrency transactions harder to track.

The jury in Manhattan federal court could not reach a verdict on charges Roman Storm conspired to launder the proceeds of hacks, including by a sanctioned North Korean government-backed group. But the jury found him guilty of the less serious charge of conspiracy to operate an unlicensed money transmitting business.

He faces up to five years in prison when he is sentenced by U.S. District Judge Katherine Failla at a later date. The money laundering and sanctions evasion conspiracy charges each carried possible 20-year sentences.

Storm was arrested in 2023 on charges that the so-called mixer he founded helped hide more than $1 billion, including hundreds of millions of dollars for Pyongyang-backed hacking group Lazarus Group, which is blacklisted by the U.S. Treasury over its alleged financial support of North Korea.

Storm, 36, had pleaded not guilty to all three felony charges he faced.

In his closing argument on July 30 after a two-week trial in Manhattan federal court, defense lawyer David Patton said even though Tornado Cash’s privacy tools may have been useful to criminals, Storm’s intent was not to help conceal illicit funds.

“There is nothing unlawful about the software that he built,” Patton said. “The evidence here shows that Roman very much did not want hackers and scammers to use Tornado Cash.”

Prosecutor Benjamin Gianforti said Storm had been informed multiple times between 2020 and 2022 that Tornado Cash was helping criminals hide dirty money, but kept running the business out of greed.

Gianforti said Tornado Cash’s emphasis on user privacy was a “cover story.”

“The real money wasn’t in protecting privacy for regular folks, it was in providing privacy for big time crypto criminals,” Gianforti said. “Hackers were his best customers.”

Tornado Cash had itself been sanctioned by the U.S. Treasury under then-President Joe Biden’s Democratic administration over its alleged support of North Korea.

The Treasury lifted those sanctions in March, two months into Republican President Donald Trump’s administration, saying it had reviewed legal and policy issues raised by the sanctions within “evolving technology and legal environments.”

Last year, one of Tornado Cash’s developers, Alexey Pertsev, was sentenced to five years and four months in prison in the Netherlands for money laundering.

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Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

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