Roman Storm, co-founder of the cryptocurrency mixing service Tornado Cash, is actively pursuing the dismissal of criminal charges against him. This follows a landmark decision by the Fifth Circuit Appeals Court, which recently deemed the U.S. Treasury’s sanctions on Tornado Cash’s smart contracts as unlawful. This court ruling has the potential to significantly influence Storm’s case, which involves serious allegations, including money laundering. Additionally, in light of the ruling, Tornado Cash’s native token, Torn, experienced a remarkable 700% surge last month.
The Court’s Landmark Ruling on Sanctions
In a bold move, the appeals court declared that the Treasury’s sanctions on Tornado Cash’s smart contracts were illegal. The court emphasized that these smart contracts are immutable, meaning they cannot be altered or controlled by anyone, including their creators. Furthermore, the court clarified that these contracts do not qualify as “property” under U.S. law, rendering them immune to government-imposed sanctions. Armed with this crucial ruling, Storm is seeking the dismissal of the serious charges against him, particularly those alleging a conspiracy to violate the International Emergency Economic Powers Act (IEEPA), which underpinned the U.S. sanctions.
Storm’s Defense: No Control, No Crime
Storm is leveraging this court ruling to argue that the charges against him are fundamentally flawed. He maintains that Tornado Cash does not function as a financial institution and that it became immutable as early as May 2020, well before the alleged money-laundering activities. Notably, Storm contends that he could not have conspired to launder money using a protocol that eludes control by anyone, including himself. In essence, there is no solid evidence linking him to money laundering via the platform.
This case has sparked widespread public outcry and initially originated from a lawsuit filed by Tornado Cash users, supported by Coinbase, against the U.S. Treasury and its Office of Foreign Assets Control (OFAC). Although the users initially lost the case, the ruling was overturned in November 2023, marking a significant victory for Tornado Cash supporters. This case underscores the evolving legal landscape surrounding decentralized platforms and highlights the potential for future legal challenges to bring about substantive changes.
Historical Context and Previous Allegations
In a related development in August 2023, the U.S. Department of Justice charged Roman Storm, along with fellow co-founder Roman Semenov, with facilitating the laundering of over $1 billion in cryptocurrency. These funds allegedly included those linked to the 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 had previously sanctioned Tornado Cash in 2022, citing its approval of unverified transactions and its alleged role in enabling cybercriminals to steal over $7 billion since 2019.
The unfolding legal proceedings and the recent court ruling emphasize the complex interplay between cryptocurrency technology and regulatory frameworks. The outcome of Storm’s case could potentially set a precedent for how decentralized platforms are treated by U.S. law enforcement agencies and may influence future cases involving similar technologies.
