New York Judge Orders Tornado Cash Co-Founder Roman Storm to Stand Trial in Money Laundering Case
Judge Failla’s ruling in the Southern District of New York concluded that the charges against Storm were plausible and included conspiring to operate an unlicensed money transmitter, facilitating money laundering, and evading sanctions through the operation of the coin-mixing service.
Importantly, Judge Failla’s ruling assessed the allegations made by the prosecutors rather than determining Storm’s guilt or innocence.
Storm, who was arrested last year, argued that the prosecutors had failed to prove that Tornado Cash had sufficient control over the funds passing through its service to be considered a money-transmitting business.
Additionally, Storm contended that the prosecutors had not adequately shown that he conspired willfully to evade sanctions.
“At this stage of the case, this court cannot simply accept Mr. Storm’s narrative that he is being prosecuted merely for writing code,” stated Judge Failla. “I am required to accept, at this stage, the allegations of the indictment.”
“I don’t get to make a determination of Mr. Storm’s intent at this stage,” Failla added. “The decision regarding the sufficiency of the evidence of that intent is for the jury and not for me.”
Tornado Cash is a coin-mixing service used for anonymous Ethereum transactions. In 2022, the platform was sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control, forbidding Americans from using it due to its association with money laundering and other illicit activities.
The department asserted that Tornado Cash had been extensively used by criminals, including the notorious North Korean state-sponsored hacker group Lazarus Group.
Judge Failla also rejected Storm’s request to compel the U.S. Department of Justice and Dutch authorities to provide communications between them. Specifically, Storm sought documents related to the mutual legal assistance treaty between the U.S. and the Netherlands, where Tornado Cash developer Alexey Pertsev was recently prosecuted.
“Mr. Storm has not shown a strong indication that the information he seeks would aid his defense,” explained Judge Failla. “Mr. Storm has not succeeded in connecting the dots and explaining precisely how the sought-after communications would support his defense.”
In April, a Dutch court found Tornado Cash developer Alexey Pertsev guilty of money laundering and sentenced him to 64 months in jail. The court determined that the developer had laundered $1.2 billion in illicit assets, a decision criticized by the Ethereum community, with Ethereum co-founder Vitalik Buterin describing it as “really unfortunate.”
The case against the Tornado Cash developers has raised concerns among crypto advocates that it could have a chilling effect on free speech, with developers being prosecuted for launching crypto projects. While courts have acknowledged that certain computer code constitutes “expressive” speech and is protected, Judge Failla stated during the hearing that the “functional capacity” of code is not covered by the First Amendment.
“When a programmer uses code to direct a computer to carry out various functions, that code is not protected speech,” said Judge Failla. “The use of computer coding or software to facilitate money laundering is far from the kind of expressive coding that would warrant First Amendment protection.”
Edited by Josh Quittner and Sebastian Sinclair