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DOJ Fights to Uphold Charges Against Tornado Cash Developers

DOJ Fights to Uphold Charges Against Tornado Cash Developers

Apr 29, 2024

DOJ Fights to Uphold Charges Against Tornado Cash Developers

The U.S. Department of Justice (DOJ) has opposed a motion by Tornado Cash developer Roman Storm to dismiss the criminal charges against him. Storm, along with fellow developer Roman Semenov, was indicted last summer on allegations of money laundering and operating an unlicensed money transmission service through Tornado Cash, a cryptocurrency mixer.

The DOJ, in a 111-page filing on Friday, challenged the defense's portrayal of Tornado Cash, arguing that the service functioned as a commercial enterprise aimed at financial gain. The indictment alleges that Storm profited from the operation, citing $2.7 million in Tornado profit reportedly transferred by Storm to unidentified cold wallets. The Block reports that Storm also used a VPN and a false identity to cash out Tornado Cash proceeds through Binance.

Prosecutors argue that Tornado Cash's success in laundering substantial sums of illicit funds underscores the necessity for regulatory oversight. The indictment focuses on transactions designed to conceal criminal proceeds, the operation of a money-transmitting business without a license, and dealings with sanctioned entities.

Defense lawyers for Storm moved to dismiss the indictment in late March, arguing that Tornado Cash does not meet the legal definition of a custodial mixing service or a financial institution. They claim that Storm lacked the capability to control the service or to prevent its misuse by cybercriminal groups such as North Korea's Lazarus Group.

The DOJ rebuffed these assertions, emphasizing that the service was launched in 2019 as a mixer with an integrated system of a website, user interface, smart contracts, and a network of 'relayers.' The agency contends that factual disputes about Tornado Cash's operation and Storm's intent should be assessed by a jury, not dismissed at this stage.

Moreover, the DOJ aims to present evidence at trial that demonstrates how Storm and his co-founders exercised control over Tornado Cash. Screenshots and other evidence are expected to detail the development and use of the system.

Roman Storm's trial is scheduled to commence in September. His co-defendant Roman Semenov has not been arrested by U.S. authorities. Another co-founder, Alexey Pertsev, is facing a separate trial for money laundering in the Netherlands, with a verdict expected on May 14.

Court Filing

CoinDesk Article

The Block Article


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