Roman Storm, the co-founder of Tornado Cash, is actively working to have the criminal charges against him dismissed in the wake of a significant legal victory. The Fifth Circuit Appeals Court recently delivered a groundbreaking ruling, stating that the U.S. Treasury’s sanctions on Tornado Cash’s smart contracts were unlawful. This decision could potentially reshape Storm’s case, which involves severe allegations, including money laundering. In an unexpected turn of events, the sanctions led to a remarkable 700% surge in the native Torn token last month.
The Court Ruling: A Landmark Decision
The appeals court’s decision sent shockwaves through the legal and cryptocurrency communities by declaring the U.S. Treasury’s sanctions on Tornado Cash’s smart contracts as unlawful. According to the court, these smart contracts are immutable, which means they cannot be altered or stopped by anyone, including their creators. Furthermore, the court clarified that these contracts do not constitute “property” under U.S. law, thus exempting them from governmental sanctions or blockades. This pivotal ruling bolsters Storm’s call for the dismissal of the money laundering charges against him, particularly those alleging a conspiracy to violate the International Emergency Economic Powers Act (IEEPA), which was instrumental in enforcing U.S. sanctions.
Storm’s Defense: Challenging the Basis of the Charges
In his defense, Roman Storm leverages this ruling to argue that the charges against him are fundamentally flawed. He asserts that Tornado Cash is not a financial institution and has been immutable since May 2020, predating the alleged money laundering incidents. Storm emphasizes that the protocol’s immutability means that he had no control over it, making it impossible for him to have conspired to launder money. In essence, there is a lack of concrete evidence to support claims of his involvement in money laundering through the platform.
The case has sparked widespread outrage, initially filed by Tornado Cash users, with support from Coinbase, against the U.S. Treasury and its Office of Foreign Assets Control (OFAC). Although the users initially faced a legal setback, the ruling was overturned in November 2023, marking a significant victory for Tornado Cash advocates. This case underscores the challenges decentralized platforms face under U.S. law and could potentially pave the way for more defined legal precedents in future cases.
Historical Context: Previous Legal Battles
In a related incident, in August 2023, the U.S. Department of Justice charged Tornado Cash co-founders Roman Storm and Roman Semenov with facilitating the laundering of over $1 billion in cryptocurrency, including funds linked to the notorious North Korean hacker group Lazarus. While Semenov remains at large, the third co-founder, Alexey Pertsev, was apprehended in the Netherlands in 2022. The U.S. Treasury sanctioned Tornado Cash in 2022 for enabling unverified transactions and allegedly facilitating the theft of over $7 billion by cybercriminals since 2019.
This ongoing legal saga reflects the broader implications for cryptocurrency and blockchain technology, highlighting the tension between innovation and regulatory compliance. As Tornado Cash continues to navigate its legal challenges, the outcome of this case could have far-reaching consequences for decentralized platforms and their interactions with government authorities.
