Ethereum Foundation Launches Fund to Aid Tornado Cash Developers

The Ethereum Foundation just teamed up with Keyring Network to create a legal defense fund for Tornado Cash developers facing serious charges. This move could set big rules for privacy in crypto. With fees from new DeFi tools already hitting over $22,000, it’s a fresh way to back open-source creators. What’s next for blockchain privacy?

Partnership Aims to Protect Privacy Builders

The Ethereum Foundation and Keyring Network kicked off this initiative to help Roman Storm and Alexey Pertsev, the developers behind Tornado Cash. These two face legal battles in the US and Europe over claims they helped with money laundering through their privacy software.

This fund uses protocol fees from Keyring’s zero-knowledge DeFi vaults to cover defense costs. For the first two months, all fees go straight to the developers’ legal needs. As of early September, it had gathered $22,109, showing quick support from the crypto community.

This isn’t just about money. It’s a test run for sustainable funding that could help other developers working on privacy tools. The Ethereum Foundation sees it as a model to shield innovators from legal risks when building open-source code.

Storm, based in the US, and Pertsev, in Europe, got charged after Tornado Cash was linked to illegal activities. But supporters argue the developers only wrote code and didn’t control how others used it.

Why This Matters for Crypto’s Future

The cases against Storm and Pertsev could change how we view responsibility in blockchain tech. If courts hold developers liable for misuse by bad actors, it might scare off people from creating privacy-focused tools.

Privacy is key in crypto, letting users keep transactions private without hiding crimes. Tornado Cash mixed funds to break traceable links, but regulators say it helped launder money.

This legal fight tests if writing open-source software equals running a money service. A win for the developers could boost innovation, while a loss might limit what builders create.

Recent stats from Chainalysis show over $1 billion in illicit funds flowed through mixers like Tornado Cash in 2022. Yet, experts note most users were likely everyday people seeking privacy, not criminals.

The Ethereum Foundation’s involvement highlights growing worries in the industry. They want to ensure developers aren’t punished for tools that others abuse.

How the Funding Works in Practice

Keyring Network’s new vaults use zero-knowledge proofs, a tech that verifies info without revealing details. This fits perfectly with privacy goals.

Fees from these vaults fuel the fund. It’s a smart way to tie DeFi growth to real-world support.

Here’s how the setup breaks down:

• Vaults let users trade in a private, permissioned way on Ethereum.
• All initial fees support Storm and Pertsev’s defenses.
• After two months, the model might expand to other privacy projects.

This approach turns protocol earnings into a shield for developers. It’s drawn praise for being creative and community-driven.

One paragraph here to note: Early backers say this could inspire more funds like it.

The Ethereum Foundation has a history of supporting privacy. In 2024, they boosted efforts after Tornado Cash sanctions, forming a “Privacy Cluster” to embed privacy into blockchain basics.

Broader Impact on Developers and Users

For everyday crypto users, this fund means stronger privacy options down the line. If developers feel safe, they’ll build better tools, making blockchain more secure for all.

But risks remain. Governments worldwide are cracking down on crypto privacy, fearing it aids crime. The US Treasury sanctioned Tornado Cash in 2022, calling it a threat.

Supporters point out that code is speech, protected under free expression laws. Groups like the Electronic Frontier Foundation have backed similar cases.

In Europe, Pertsev’s trial raised alarms about overreach. He was convicted in 2024 but appeals continue.

This initiative by Ethereum and Keyring offers hope. It shows the community stepping up when laws lag behind tech.

The crypto world watches closely. A 2025 report from Deloitte predicts privacy tech will grow 25% yearly, but legal hurdles could slow it.

This new fund from the Ethereum Foundation and Keyring Network marks a bold step in defending Tornado Cash developers, potentially shaping the rules for privacy in blockchain for years to come. It blends DeFi innovation with real support, raising over $22,000 quickly and setting a model for future efforts. As crypto evolves, moves like this remind us of the fight for open-source freedom amid regulatory pressures.