Regulation
Tornado Cash Founder Trial Postponed to December
A federal judge has allowed the trial of Roman Storm, the co-founder of Tornado Cash, a cryptocurrency mixing service, to be delayed. Scheduled for September the trial has been moved and will now take place in the first two weeks of December. This comes at the back of a long legal battle in regard to the functions and authenticity of Tornado Cash.
Judge Grants Delay in Tornado Cash Trial
Judge Katherine Polk Failla of the Southern District of New York approved the request for the delay stating that the legal issues in the case are many and require due diligence. Storm’s defense counsel had asked for more time to study the evidence and build their defense with a view to commencing the trial in January 2025.
Nevertheless, the judge arrived at his decision in early December, stressing the need for preparation.
Judge Failla has GRANTED Roman Storm’s motion to delay his criminal trial for operating Tornado Cash. New trial date is December 2. Full writeup of a very interesting hearing coming soon.
— David Z. Morris, PhD (@davidzmorris) July 12, 2024
During the hearing, the defense lawyers called for broader disclosure of documents and challenged the charges against Storm. They argue that Storm created privacy software and did not have control over Tornado Cash after May 1st, 2020 hence it is only unfair to charge him for the activities of users of the software, including what they allege are money laundering activities by North Korean hackers.
Legal Arguments and Core Issues
The main issue of the trial is whether Roman Storm can be prosecuted for the activities of the Tornado Cash users. Prosecutors claimed that Storm and his co-founders should have prevented unlawful activities like banning transactions associated with criminals.
The defense, in its turn, noted that the smart contracts of Tornado Cash cannot be changed, and Storm did not control the service after May 2020.
Defense attorney Brian Klein pointed out that this is the first case of money laundering where the defendant has no control over the money. Assistant U. S. Attorney Thane Rehn and the prosecution however argued that any legitimate business that has knowledge of criminal activities has to act to prevent it, which Tornado Cash did not do.
Evidentiary and Procedural Motions
The hearing also addressed several motions, including the defense motion to order the production of communications between the US and Dutch investigators. These are the documents concerning the case and arrest of Tornado Cash co-founder Alexey Pertsev in the Netherlands.
The defence stated that these documents could be vital to the case, while the prosecution objected due to diplomatic concerns and speculative connection.
Also, there were controversies on the extent of search warrants and seizures of digital currencies. The defense attempted to prevent the government from being able to seize the on-chain crypto wallets belonging to Storm, stating that tokens on the blockchain cannot be seized from private keys discovered during a search of a person’s residence.
Judge’s Considerations and Future Rulings
Judge Failla will decide on the motions to compel discovery, to limit the search of Storm’s crypto wallets, and to dismiss the charges at a later time. She raised concerns on the consequences of making developers responsible for criminals’ activities when using their software, comparing Tornado Cash to applications such as WhatsApp.
Prosecutors claimed that while the First Amendment shields the activities of WhatsApp and are therefore not unlawful, the same cannot be said for Tornado Cash’s financial transactions.
However, today, Alexey Pertsev, another developer of Tornado Cash, was refused release by a Dutch court. Pertsev was found guilty of money laundering and received more than five years in prison for the facilitation of laundering of stolen and hacked cryptocurrency via TornadoCash.
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