Tornado Cash co-founder seeks dismissal of US crypto-laundering charges

Roman Storm, co-founder of cryptocurrency mixer Tornado Cash, seeks to dismiss all three accusations against him — including that he allegedly ran a money laundering operation and breached the International Emergency Economic Powers Act.

“By no stretch can Mr. Storm be deemed to have conspired to launder funds,” Storm’s attorneys argued in a March 29 filing with the U.S. District Court for the Southern District of New York.

Storm’s lawyers claimed that Tornado Cash “became immutable” and made publicly available before being used by the hacker groups sanctioned by the U.S. Department of Treasury.

As a result, Storm allegedly had little control over preventing a “sanctioned entity from using it.”

Prosecutors allege that Tornado Cash helped the North Korean Lazarus Group evade U.S. sanctions, reportedly enabling the regime to finance its nuclear program.

Furthermore, the lawyers argued that Tornado Cash was not a money-transmitting business because it did not charge a fee for sending payments and users had complete control of their cryptocurrency.

They said that Storm sought to create software solutions to ensure financial privacy for law-abiding cryptocurrency users and that the charges are “fatally flawed and should be dismissed.”

Storm pled not guilty to all allegations in September 2023. He was released on a $2 million bond shortly after his arrest and is primarily barred from traveling outside of specified regions of New York, New Jersey, Washington, and California.

This comes as the US government maintains its aggressive crackdown on cryptocurrency mixing services.

However, the crypto community values crypto mixers because they can give improved privacy and even confidentiality for people seeking to conduct anonymous business transactions for legitimate reasons.

At one point, the Arbitrum DAO proposed transferring approximately $1.3 million in ARB tokens to cover Storm’s legal bills.

The proposal stated that Tornado Cash is a beacon of privacy and security in the cryptocurrency sector, offering consumers a secure means to perform private transactions on the Ethereum blockchain.

“No one shall be subject to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honor and reputation. Everyone has the right to the protection of the law against such interference or attacks,” the Arbitrum community said at that time.

The plan has since been removed (the reasons for its removal are unclear).

In February, the crowdfunding platform GoFundMe canceled its fundraiser aimed at covering the legal costs in the Tornado Cash case, citing a breach of its service terms. The policy prevented fundraising activities that could pose risks or liabilities to the platform, its staff, or its users. Despite gathering $30,000 in support, GoFundMe refunded all contributions following the cancellation.

The Office of Foreign Assets Control (OFAC) placed the mixer under sanctions in August 2022.

Tornado Cash was blocked due to its involvement in the laundering of illicit funds. According to U.S. officials, attackers laundered more than $7 billion through the mixer since its inception. Hackers of the North Korean group Lazarus actively used the mixer.