DOJ Cites Bitcoin Fog Ruling to Block Roman Storm Acquittal Bid
Federal prosecutors cited the D.C. Circuit's affirmance of Bitcoin Fog operator Roman Sterlingov's 12.5-year conviction to oppose Tornado Cash developer Roman Storm's acquittal motion, arguing a single user's Manhattan apartment transactions establish New York venue for Storm's retrial.
Federal prosecutors are using a custodial-mixer appellate win to bind a non-custodial, open-source developer. The legal gap between those two fact patterns is the entire ballgame.
Key takeaways
- Federal prosecutors filed supplemental authority on October 5 citing the D.C. Circuit's Sept. 25, 2026 affirmance of Bitcoin Fog operator Roman Sterlingov's 12.5-year conviction to oppose Tornado Cash developer Roman Storm's post-trial acquittal motion in the Southern District of New York.
- The DOJ's venue theory: a single witness's Tornado Cash transactions from a Manhattan apartment are enough to anchor Storm's money-laundering and unlicensed money-transmission retrial in New York, now scheduled for April 26, 2027, with a combined statutory maximum of up to 40 years.
- The Bitcoin Fog case involved a centralized, custodial mixer Sterlingov personally operated. Storm wrote open-source, non-custodial smart contract code. Prosecutors are arguing that distinction does not matter for venue or money-transmission liability.
Federal prosecutors filed a supplemental authority letter with Judge Katherine Polk Failla in the Southern District of New York on Monday, citing the D.C. Circuit's Sept. 25, 2026 ruling in United States v. Sterlingov (No. 24-3161) to oppose Tornado Cash developer Roman Storm's motion for acquittal. The D.C. Circuit affirmed Sterlingov's convictions on all four counts and his 150-month sentence, holding that venue in Washington, D.C. was proper because an undercover agent conducted Bitcoin Fog transactions from a D.C. office and because Bitcoin Fog served customers in the district.
Prosecutors told Judge Failla that reasoning "directly supports" their position in Storm's case. The venue anchor: testimony from Shakeeb Ahmed, the confessed exploiter of Crema Finance who testified at Storm's trial, who said he used Tornado Cash from his Manhattan apartment. Storm had argued Ahmed's transactions did not further the alleged conspiracy and therefore could not establish New York venue. The government countered that even short-lived deposits increase the pool of transactions used to obscure fund flows, meaning Ahmed's Tornado Cash activity advanced the alleged scheme regardless of duration.
The DOJ's Cross-Case Playbook
This filing is not a routine citation drop. Prosecutors are assembling case law brick by brick across separate cases to establish that a developer's geographic location, intent, and custody over funds are legally irrelevant for venue purposes. What matters, under the government's theory, is where a user opened their laptop.
That logic has expansive reach. If Failla adopts it and it survives appellate review, federal prosecutors can drag the next privacy-tool developer into any district where a single user happened to transact. Joinmarket contributors, Payjoin implementers, Lightning privacy developers: any of them could face federal jurisdiction in a district they've never visited, based entirely on a user's location.
The custodial-to-non-custodial leap is the core danger. Sterlingov personally ran Bitcoin Fog, controlled user funds, and profited from the operation. Storm wrote code. The DOJ is arguing those two fact patterns produce identical legal exposure. That analogical move, if it sticks, redefines "money transmitter" to include anyone whose open-source code a criminal chose to use.
A jury convicted Storm in August 2025 on one count of conspiring to operate an unlicensed money-transmitting business but deadlocked on money-laundering and sanctions-conspiracy counts. Storm filed his acquittal motion in fall 2025, arguing the government never proved he intended to help criminals misuse Tornado Cash. Failla heard arguments in April 2026 and has not yet ruled. The retrial on the deadlocked counts, carrying a combined statutory maximum of up to 40 years, is scheduled for April 26, 2027, if those charges survive.
The Contradiction Storm Is Pressing
Storm pushed back publicly, posting on X on Monday: "The DOJ is still coming after me with everything it has." He also pointed to FinCEN's October 5 announcement that it would withdraw its proposed crypto-mixer reporting rule, framing the two events as evidence of conflicting government postures toward privacy tools.
He has a point on the contradiction, though not a legal one. FinCEN withdrawing a proposed reporting rule does not dismiss criminal charges or repeal 18 U.S.C. § 1960. The statutes the government is prosecuting under remain intact. But the political optics are real: the same federal apparatus is retreating on mixer policy with one hand while using the other to build appellate precedent that could criminalize the builders of every future privacy tool.
That tension matters for freedom-tech development broadly. The government's left hand signals "lawful crypto privacy is recognized." The right hand is constructing the case law to prosecute the people who build the infrastructure that makes privacy possible.
What to Watch
Judge Failla's ruling on the acquittal motion is the immediate trigger. If she grants it on the venue-challenged counts before retrial, the Bitcoin Fog citation becomes moot and the DOJ's cross-case playbook breaks down on its first deployment outside the Bitcoin Fog fact pattern. If she denies it, the government gets to test this theory before a jury in April 2027, with the appellate record now explicitly supporting their venue argument. Every privacy-tool developer in the open-source Bitcoin space should be watching that ruling closely.
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Frequently Asked Questions
What is the legal difference between Bitcoin Fog and Tornado Cash?
Bitcoin Fog was a centralized, custodial mixer that Sterlingov personally operated, controlled user funds through, and profited from directly. Tornado Cash was an open-source, non-custodial smart contract protocol. Storm's defense argument turns on that distinction: he wrote code he did not control and held no user funds. The DOJ's position is that the distinction does not change the venue or money-transmission liability analysis.
What happens if Judge Failla denies Storm's acquittal motion?
The retrial on the money-laundering and sanctions-conspiracy counts proceeds as scheduled on April 26, 2027. Those two counts carry a combined statutory maximum of up to 40 years. Storm already holds a conviction on the unlicensed money-transmitting conspiracy count from August 2025, which carries a maximum of five years.
Does Treasury's withdrawal of the FinCEN mixer reporting rule help Storm's case?
Not legally. A withdrawn proposed rule does not affect criminal charges filed under existing statutes. The government's prosecution proceeds under 18 U.S.C. § 1960 and the money-laundering statutes regardless of FinCEN's rulemaking posture. Storm is pressing the contradiction as a public argument, but it carries no weight inside Judge Failla's courtroom.
