Code is never an illegal business. You have to run the code to do an illegal business. In this case running the mixer is apparently illegal (wonder if at all or with just some specific cases), but maintaining and improving the code to run such a mixer certainly not.
Working for an illegal business (tornado cash isn't just some code repository, it's basically a SaaS business backed on a chain), on its product, usually makes you liable. That's why people working for cartels are prosecutable.
edit: I believe the term is "criminal facilitation."
crypto wars 2.0