The Department of Justice said Roman Storm profited to the tune of millions while working on Tornado Cash.<\/p>\n
The\u00a0U.S.\u00a0Department of Justice has opposed a motion from Roman Storm, a developer who worked on Tornado cash, a sanctioned crypto mixing protocol, to dismiss criminal charges against him.<\/p>\n
In a court\u00a0filing<\/a>\u00a0published on April 26, the department said its charges against Storm should be put before a jury, arguing that it is too early\u00a0in the proceedings\u00a0to warrant dismissal.<\/p>\n On August 23, 2023, the Department of Justice (DoJ) arrested Storm\u00a0on charges of\u00a0operating an unlicensed money-transmitting business and conspiring to engage in money laundering. The DoJ said Storm profited millions from developing, marketing, funding, and operating Tornado Cash from September 2020 to August 2022.<\/p>\n Over those two years, the department alleges that Tornado Cash facilitated\u00a0the\u00a0laundering\u00a0of\u00a0at least $1 billion in criminal proceeds, including hundreds of millions associated with North Korea\u2019s state-sponsored hacking organization, Lazarus Group.<\/p>\n “The Indictment clearly alleges that the Tornado Cash service was a commercial enterprise carried on for profit or finanancial [sic] gain and that the defendant himself profited from its operation through his control, with others, of key components of the integrated Tornado Cash service,” the filing reads.<\/p>\n In March, Storm’s defense team sought the case\u2019s\u00a0dismissal<\/a>, arguing that Tornado Cash does not constitute a “financial institution” as it is not a \u201ccustodial mixing service.\u201d The defense added that Storm\u00a0was unable to\u00a0prevent groups like Lazarus from utilizing the service due to the protocol\u2019s decentralized\u00a0nature,\u00a0and argued\u00a0that developing code for Tornado Cash does not comprise the operation of a money laundering entity.<\/p>\n The DoJ countered that Tornado Cash did not merely comprise code, also spanning “a website, user interface, [and] certain smart contracts.\u201d<\/p>\n Tornado Cash is a custodial protocol that enables private cryptocurrency transactions by blending the assets and transactions of users within its smart contracts, making it difficult to trace the origins of the funds. In its documents, Tornado Cash\u00a0claims<\/a>\u00a0it does not comprise a mixer as funds as its \u201canonymity pools\u201d do not \u201ccommingle\u201d deposited funds.<\/p>\n In August 2022, Tornado Cash\u00a0was\u00a0sanctioned<\/a>\u00a0by the\u00a0U.S.\u00a0Treasury Department in response to Lazarus Group routinely adopting Tornado Cash as a vehicle to obfuscate the on-chain transaction history associated with its stolen assets.<\/p>\n Storm pleaded not guilty to all charges\u00a0and was\u00a0released on a $2 million bond in September\u00a02023,\u00a0and\u00a0is now set\u00a0to stand trial in September.<\/p>\n Roman Semenov, a fellow Tornado Cash developer, is accused of\u00a0facilitating<\/a>\u00a0money laundering activities and unlicensed money transmissions through his contributions to Tornado Cash. Semenov has not\u00a0been apprehended.<\/p>\n Privacy advocates rallied in defense of Storm on social media in response to the latest DoJ filing.<\/p>\n In an April 27\u00a0tweet<\/a>, Amanda Tuminelli, legal head at the DeFi Education Fund, said the Justice Department\u2019s filing was “filled with technical inaccuracies, obvious disdain for privacy and emerging technology, and misapplication of the law.\u201d<\/p>\n Gabriel Shapiro, a crypto-focused lawyer at MetaLeX Labs,\u00a0described<\/a>\u00a0the DoJ\u2019s indictment as an \u201cabhorrent case\u2026 esp[ecially] to seek a prison sentence over.\u201d Shapiro added that he doubts the proceedings will establish a broader precedent that DeFi developers operate as unlicensed money transmitters.<\/p>\n \u201cI\u2019m\u00a0really glad\u00a0that the regulators sanctioned Tornado Cash, cozied up to SBF, and focused on killing DeFi instead of putting in guardrails\u00a0to potentially prevent the FTX collapse,\u201d Anthony Sassano, the host of the Daily Gwei podcast,\u00a0tweeted<\/a>. \u201cI feel very protected as an investor right now.\u201d<\/p>\nTornado Cash<\/h2>\n
Sanctioned<\/h2>\n