Arbitrum DAO has withdrawn its proposal to support Tornado Cash creators with $1.3 million for legal costs. The decision highlights challenges faced by privacy-centric technologies in the crypto space. It also raises concerns about the broader impact on the cryptocurrency industry and its regulatory landscape.

Leading participant in the decentralised finance (DeFi) space, Arbitrum DAO, has withdrawn its offer to support Roman Storm and Alexey Pertsev, the developers of Tornado Cash, in their legal defence. The original plan called for setting aside about $1.3 million in ARB tokens from the community wallet to pay for the creators of the cryptocurrency mixer’s legal fees, PR campaigns, and lobbying work.

The ongoing story of Tornado Cash has taken a significant turn with this ruling. The removal of support from Arbitrum DAO raises concerns about the future of privacy-focused technology and the legal obstacles they face as the cryptocurrency community keeps a close eye on these developments.

Arbitrum DAO’s Initial Proposal

Initially, Arbitrum DAO proposed distributing ARB tokens from the community wallet to support Tornado Cash inventors Roman Storm and Alexey Pertsev. The planned financing, which would have cost about $1.3 million, was intended to pay for the developers’ legal defence expenses in light of the ongoing legal challenges. In addition, the proposal contained clauses enabling lobbying and public relations campaigns to support privacy-protecting technology. This action by Arbitrum DAO was viewed as a significant step towards aiding bitcoin developers involved in legal disputes.

Arbitrum DAO chose not to move forward with their plan to provide funding for the authors of Tornado Cash’s legal defence. The proposal was taken out of consideration, and later on, an Arbitrum DAO representative verified that the removal was done at the author’s request. But no other information was given about the reasons for this withdrawal, thus, the cryptocurrency community was left to speculate on the causes and ramifications of this choice.

It still needs to be clarified why the idea was withdrawn in the first place. The cryptocurrency community has been the subject of several conjectures due to Arbitrum DAO’s lack of transparency. The choice may have to do with the possible legal and reputational ramifications of endorsing a website such as Tornado Cash, which has been charged with aiding in money laundering. Others speculate that the decision to withdraw the proposal may have been influenced by external forces or internal disputes within the DAO.

Legal Troubles of Tornado Cash

Legal disputes have surrounded Tornado Cash and its founders, who are accused of money laundering and running an unlicensed money transfer company. Authorities in the US have connected the network to the money laundering of more than $1 billion, including money linked to the hacker collective Lazarus Group. Developers Alexey Pertsev and Roman Storm have been taken into custody in the Netherlands and the United States. Roman Semenov, the third co-founder, has yet to be heard from. These legal challenges have highlighted the hazards encountered by creators of privacy-focused technologies in the current legislative landscape.

Concerns have been expressed over the future of privacy-focused cryptocurrency applications due to the legal challenges surrounding Tornado Cash. The platform’s takedown underscores how difficult it is to balance protecting user privacy and following legal obligations. The difficulty for developers working on related technologies is making sure that their apps preserve user privacy without unintentionally aiding illicit activity. The circumstance emphasises the requirement for precise regulatory norms that encourage creativity while guarding against abuse.

Apart from facing legal issues, the Tornado Cash developers have also experienced financial difficulties. A GoFundMe campaign to cover Storm and Pertsev’s legal bills was shut down on February 16. GoFundMe terminated the fundraising due to a breach of their terms of service, claiming that the fundraiser would put the site and its users in danger or legal trouble. This episode underscores the difficulties in soliciting money for contentious causes within the cryptocurrency community. Further, it complicates the efforts to support the inventors of Tornado Cash in their legal defence. 

Potential Impact on the Crypto Industry

The developers of Tornado Cash are now embroiled in legal disputes, and their decision to withdraw support from Arbitrum DAO could significantly impact the cryptocurrency market. This scenario demonstrates how regulators and law enforcement organisations increasingly scrutinise privacy-focused technologies. The delicate balance between privacy and regulatory compliance will grow more critical as the sector develops. The resolution of Tornado Cash’s legal challenges might establish a standard for handling comparable platforms in the future, which might impact the creation and uptake of privacy-focused products in the cryptocurrency market.

An important turning point in the unfolding tale of the cryptocurrency mixer is the decision made by Arbitrum DAO to withdraw its offer to pay for the legal defence of Tornado Cash’s developers. The difficulties Tornado Cash and its developers have had with the law highlight how difficult it is to manage privacy and legal requirements in cryptocurrency. The conclusion of this scenario could have long-term effects on the development of privacy-focused technologies and the larger cryptocurrency ecosystem as the community watches for subsequent developments.


Kelly has carved a niche in the dynamic world of Web3 over the past three years, combining her talents in marketing and writing to become a standout Web3 copywriter. Her journey in this innovative field is distinguished by her profound engagement with the decentralized technology landscape. Kelly’s creative prowess, coupled with her deep understanding of Web3, enables her to create compelling narratives that resonate deeply within the blockchain community. Beyond writing, Kelly’s marketing acumen has been instrumental in elevating various Web3 marketing projects, making them prominent in the realm of digital innovation.