Roman Storm, co-founder of Tornado Cash, is set to stand trial on July 14 at a Manhattan Federal Court, facing charges of conspiring to launder money and operating an unlicensed money transmitter.
Tornado Cash is a cryptocurrency-mixing service that allows users to increase their privacy, but also enables hackers to launder proceeds from exploited platforms. The Ethereum Foundation (EF) has voiced its support for Storm, commenting on X that privacy is normal and that writing code is not a crime.
The EF has supported Storm since he was indicted in August 2023 for helping build Tornado Cash. US authorities allege that the mixing service is responsible for laundering over $1 billion in illicit funds. Tornado Cash allows users to disguise the link between a sender and receiver, thus allowing users to anonymize their transaction history. US authorities believe this service has enabled criminals to disguise their illicit transactions and profit from illegal activities. Storm’s defence, however, claims that the case against him threatens open source innovation and may stifle future attempts by developers to engage in the DeFi market.
US authorities have changed their approach to regulating cryptocurrencies. The case against Roman Storm comes after a new administration has scaled back regulatory activities against crypto developers. In December 2024, the US Treasury’s Office dropped its sanctions against Tornado Cash. Storm’s defence argued that the case against their client should be dropped since regulators had changed their stance towards the mixer service.
Storm wrote on X that he has a court case next month and that the DOJ wants to bury DeFi. He explained that US authorities wanted him to implement Know Your Customer (KYC) procedures with the mixing service, which would have made the service obsolete. Storm concluded that the DOJ was blocking his witnesses from testifying and that if successful, it would crush the DeFi market.
The DOJ dismissed Storm’s expert witnesses from participating in the court case. Storm was adamant that US authorities were aiming to crush him during the trial. However, the expert witnesses planned to provide details about digital privacy, blockchain technology, and KYC requirements. Storm’s defence team would argue that the KYC requirements could not apply to Tornado Cash. However, the prosecutors felt these topics were irrelevant to the current case. The prosecutors dismissed the first expert witness, Matthew Green, because he didn’t disclose any relevant opinions to the case. However, prosecutors commented that Green disclosed details about the Tornado Cash protocol that may have been relevant to the case. The prosecutors scrutinized all of Storm’s expert witnesses, one by one, questioning the relevance of their testimony. The DOJ further criticised the expert witnesses for judging the appropriateness of KYC requirements for Tornado Cash. According to the DOJ, such judgments should be reserved for the judge, not the expert witnesses.
The Ethereum Foundation (EF) commented on X that they had donated funds to support Storm’s defence and would match up to $750,000 donated from the community. The EF believes that Storm is innocent and should not be prosecuted for creating privacy-enabling technologies. Storm is raising funds for his trial next month and hopes to raise $2 million. Storm was indicted in 2023 for conspiring to commit money laundering. He immediately cited the First Amendment as a defence to dismiss the charges.
Meanwhile, a hacker who stole $23 million in crypto from Bittrue exchange in 2023 is starting to launder the funds through Tornado Cash. The hacker sent $30 million to Tornado Cash to anonymize the funds. The hacker made money from the stolen funds by selling the ETH tokens and buying them when the price of Ethereum was much lower. It is unclear whether the hacker is working alone or with a group. The actions of hackers may further complicate the ongoing case against Storm. DOJ officials may see the actions of hackers as proof that the privacy-focused service facilitates criminal activity.
Source link
