Tornado Cash Co-Founder Roman Storm Fights Money Laundering Accusations in Court

Roman Storm, co-founder of crypto mixer Tornado Cash, seeks to dismiss allegations of conspiracy to launder funds and breaching the International Emergency Economic Powers Act. Storm's lawyers assert that Tornado Cash was immutable and publicly available before being used by sanctioned hacker groups, thus limiting his control in preventing their use. They also argue that Tornado Cash is not a money-transmitting business, as it charges no fees and users retain complete control of their cryptocurrency.

Tornado Cash Co-Founder Roman Storm Challenges Money Laundering Accusations

New York, March 29, 2023 - Roman Storm, co-founder of the cryptocurrency mixer Tornado Cash, has filed a motion to dismiss all three charges against him, including allegations of money laundering and violation of the International Emergency Economic Powers Act (IEEPA).

Storm's attorneys argue that he cannot be held responsible for money laundering, as Tornado Cash was immutable and publicly available before being used by North Korean hacker groups sanctioned by the U.S. Treasury Department. They emphasize that Storm had limited control over preventing sanctioned entities from using the mixer.

Government's Allegations

Prosecutors allege that Tornado Cash played a crucial role in the Lazarus Group's ability to evade U.S. sanctions, allegedly enabling the North Korean regime to finance its nuclear program. The government claims that Storm knowingly assisted the Lazarus Group in laundering illicit funds.

Defense Arguments

Storm's defense team maintains that Tornado Cash is not a money-transmitting business, as it does not charge fees for sending payments and users retain complete control over their cryptocurrency. They argue that Storm solely sought to create software solutions to enhance financial privacy for legitimate cryptocurrency users.

The defense highlights that Storm's actions were not in violation of the IEEPA, as he did not intentionally or recklessly engage in transactions with sanctioned entities. They assert that the charges are "fatally flawed" and should be dismissed.

Storm's Release and Restrictions

Storm pleaded not guilty to all charges in September 2023. He was released on a $2 million bond and is restricted from traveling beyond specific regions of New York, New Jersey, Washington, and California.

Community Support for Tornado Cash

The cryptocurrency community has expressed strong support for Tornado Cash, emphasizing its importance for privacy and anonymity in legitimate business transactions. At one point, the Arbitrum DAO proposed transferring $1.3 million in tokens to support Storm's legal expenses, recognizing the mixer's role in protecting user privacy.

Government's Crackdown on Cryptocurrency Mixers

The U.S. government has been aggressively pursuing legal action against cryptocurrency mixing services, which anonymize transactions and make it harder to trace illicit activities. However, critics argue that this crackdown infringes upon the legitimate privacy rights of cryptocurrency users.

Crowdfunding Efforts Thwarted

Initial attempts to crowdfund Storm's legal costs on GoFundMe were halted due to violations of the platform's service terms. The platform refunded all contributions, despite gathering $30,000 in support.

Tornado Cash Sanctions

The U.S. Office of Foreign Assets Control (OFAC) imposed sanctions on Tornado Cash in August 2022, freezing its assets and prohibiting U.S. persons from interacting with the service. The sanctions stemmed from Tornado Cash's alleged involvement in laundering illicit funds, including over $7 billion from the Lazarus Group.

The Tornado Cash case has raised complex legal and ethical questions regarding the balance between financial privacy and national security. The outcome of the trial could have significant implications for the future of cryptocurrency and the ability of individuals to safeguard their financial information.