A U.S. district court judge ruled Thursday that the money laundering case against Roman Storm shall proceed, denying the Tornado Cash co-founder’s motion to dismiss the high-profile case.
The ruling delivered by Judge Katherine Polk Failla in the Southern District of New York found that prosecutors plausibly charged Storm with conspiring to operate an unlicensed money transmitter, facilitating money laundering and sanctions evasion in operating the coin-mixing service.
Notably, Failla’s ruling assessed whether the facts alleged by prosecutors met the merits of the charges and not whether Storm was guilty of them.
Storm, who was arrested last year, argued that prosecutors failed to allege that Tornado Cash had sufficient control over funds flowing through service to be considered a money-transmitting business.
Additionally, Storm argued that prosecutors did not sufficiently state he willfully conspired to evade sanctions.
Tornado Cash Use Could Complicate CertiK's Defense Against Kraken ‘Extortion’ Claims
Crypto Twitter’s blockchain sleuths are zeroing in on CertiK’s researchers, who apparently sent funds to a blacklisted crypto mixer after boosting them from Kraken in what it claims was a white-hat hack. The crypto exchange’s CSO, Nick Percoco, declared Wednesday that Kraken was treating $3 million in crypto lost as a “criminal case.” A group that had exploited a bug, since patched, was able to “effectively print assets in their Kraken account,” he wrote. The fracas formed after CertiK claimed r...
“At this stage in the case, this court cannot simply accept Mr. Storm's narrative that he is being prosecuted merely for writing code,” Failla said. “I am required to accept, at this stage, the allegations of the indictment.”
"I don't get to make a determination of Mr. Storm's intent at this stage," Failla added. “The decision regarding the sufficiency of the evidence of that intent is for the jury and not for me."
Coin-mixing service Tornado Cash is used to send and receive Ethereum anonymously. In 2022, the tool was sanctioned by the Department of the Treasury’s Office of Foreign Assets Control, banning Americans from using the platform on the grounds that the service aids money laundering, among other illicit things.
The department claimed that Tornado Cash has been heavily used by criminals, including the notorious North Korean state-sponsored hacker organization Lazarus Group.
Failla also denied Storm’s motion to compel the Department of Justice and Dutch authorities to turn over communications between them. Specifically, Storm sought documents related to the mutual legal assistance treaty between the U.S. and the Netherlands, where Tornado Cash developer Alexey Pertsev was prosecuted recently.
WazirX Funds on the Move as Hacker Shifts $33 Million to Tornado Cash
Around $33 million in crypto stolen from Indian crypto exchange WazirX are on the move, with the hacker responsible sending the funds to a new address and then to coin mixer Tornado Cash. The hacker has been moving funds in blocks of 5,000 ETH (around $12 million at today's Ethereum price), shifting one tranche Thursday morning according to security firm Cyvers. It follows earlier transfers on Wednesday and Monday, bringing the total transferred over the course of the week to $33 million. 🚨UPD...
“Mr. Storm has not demonstrated a strong indication that the information he seeks would aid his defense,” Failla said. “Mr. Storm has not succeeded in connecting the dots and explaining precisely how the communications sought would aid the defense.”
In April, a Dutch court found Tornado Cash developer Alexey Perstev guilty of money laundering and sentenced him to 64 months in jail. A Dutch judge determined that the developer laundered $1.2 billion in illicit assets, a ruling decried by the Ethereum community; Ethereum co-founder Vitalik Buterin described it as “really unfortunate.”
Crypto advocates have warned that the case against Tornado Cash developers could chill free speech, with developers prosecuted for launching crypto projects. While the courts have found that some computer code is “expressive” and as such, protected speech, Failla said at the hearing today that the “functional capacity” of code is not protected under the First Amendment.
“When a programmer is using code to direct a computer to perform various functions, that code is not protected speech,” Failla said. “The use of computer coding or software to achieve [money laundering] is far from the expressive sort of coding that would merit First Amendment protection.”
Edited by Sebastian Sinclair
