In summary
- A U.S. district court judge ruled Thursday that the money laundering case against Roman Storm will move forward.
- The ruling found that prosecutors plausibly accused Storm of conspiring to operate an unauthorized money transmitter and facilitate money laundering.
- Judge Katherine Polk Failla denied Storm’s request to dismiss the case, saying she cannot determine his intent at this stage.
A U.S. district court judge ruled Thursday that the money laundering case against Roman Storm will move forward, denying the Tornado Cash co-founder’s request to dismiss the high-profile case.
The ruling issued by Judge Katherine Polk Failla in the Southern District of New York found that prosecutors plausibly accused Storm of conspiring to operate an unauthorized money transmitter, facilitating money laundering and evading penalties by operating the money mixing service. coins.
Importantly, 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 enough control over the funds flowing through the service to be considered a money transmission business.
Additionally, Storm argued that prosecutors did not sufficiently prove that he intentionally conspired to evade sanctions.
“At this stage of the case, this court cannot simply accept Mr. Storm’s narrative that he is being prosecuted just for writing code,” Failla said. “I am obliged to accept, at this stage, the prosecution’s allegations.”
“I cannot determine Mr Storm’s intention at this stage,” Failla added. “The decision on the sufficiency of the evidence of that intent is for the jury and not for me.”
The Tornado Cash Cryptocurrency mixing platform is used to send and receive Ethereum anonymously. In 2022, the tool was sanctioned by the Treasury Department’s Office of Foreign Assets Control, prohibiting Americans from using the platform on the grounds that the service facilitates money laundering, among other illicit activities.
The Department stated that Tornado Cash has been widely used by criminals, including the notorious North Korean state-sponsored hacking organization, Lazarus Group.
Failla also rejected Storm’s request to force the Justice Department and Dutch authorities to hand over communications between them. Storm requested documents related to the mutual legal assistance treaty between the US and the Netherlands, where Tornado Cash developer Alexey Pertsev was recently indicted.
“Mr. Storm has not shown a strong indication that the information he seeks would assist his defense,” Failla said. “Mr. Storm has failed to connect the dots and explain precisely how the requested communications would assist the defense.”
In April, a Dutch court found Tornado Cash developer Alexey Perstev guilty of money laundering and sentenced him to 64 months in prison. A Dutch judge found that the developer laundered $1.2 billion in illicit assets, a decision criticized by the Ethereum community; Ethereum co-founder Vitalik Buterin described it as “really unfortunate.”
Cryptocurrency advocates have warned that the case against Tornado Cash developers could chill freedom of expression, with developers prosecuted for launching cryptocurrency projects. While courts have found that some computer code is “expressive” and, as such, protected by free speech, Failla said at the hearing that the “functional capacity” of the code is not protected by the First Amendment.
“When a programmer is using code to direct a computer to perform various functions, that code is not protected as expression,” Failla said. “The use of computer encryption or software to accomplish (money laundering) is far from the type of expressive encryption that would merit First Amendment protection.”
Edited by Josh Quittner and Sebastian Sinclair
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