In a significant legal development, Roman Storm, co-founder of Tornado Cash, will now face trial after a US court declined to dismiss several charges brought against him by the US Department of Justice (DOJ). This comes a year after the DOJ announced an indictment against Storm and fellow Tornado Cash developer Roman Semenov.
Failed Motion to Dismiss by Tornado Cash Developer
According to US authorities, Storm and Semenov are among three individuals who created, promoted, and operated Tornado Cash, a digital platform notorious for facilitating over $1 billion in money laundering activities. This includes transactions tied to prominent criminal syndicates such as the Lazarus Group. Tornado Cash is a decentralized cryptocurrency protocol that obfuscates transaction trails by mixing multiple assets, making it a tool of choice for hackers to launder stolen funds.
In response to the DOJ charges, Roman Storm filed a motion to dismiss, arguing that his First Amendment rights were infringed upon, among other defenses. However, during a telephonic conference on September 26, US Judge Katherine Polk Failla of the Southern District of New York denied Storm’s request. As a result, the blockchain developer will undergo a full-scale legal trial.
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Amanda Tuminelli, Chief Legal Officer at the DeFi Education Fund, explained that Judge Failla clarified that controlling transactions on Tornado Cash is not a prerequisite for operating a money-transmitting business under Section 1960 of the US Constitution. The judge likened Tornado Cash to other money-transmitting businesses, emphasizing that the platform’s operations fall within the scope of money transmission.
Furthermore, Judge Failla dismissed Storm’s defense that creating Tornado Cash through coding constitutes free speech. She pointed out that the “functional capability” of code as speech is not protected under the First Amendment Rights Act. Judge Failla concluded that the issues raised by Storm’s lawyers are factual matters that need to be resolved in a trial. She stated, “To the extent Storm is asking me to decide a controverted issue of fact, I am not able to do that.”
Roman Storm’s Trial Set for December
Following Judge Failla’s decision, Roman Storm is scheduled to stand trial on December 2 in New York. Both Storm and Semenov face charges of conspiracy to commit money laundering, operating an unregistered money-transmitting business, and violating the International Economic Emergency Powers Act. If convicted, they could each face up to 45 years in prison.
While Roman Storm remains in DOJ custody following his arrest in August 2023, Roman Semenov is still at large, with his whereabouts unknown. Meanwhile, Alexey Pertsev, the third co-founder of Tornado Cash, has been sentenced to five years in prison by Dutch authorities following his indictment in 2022.
The outcome of this trial is likely to have significant implications for the cryptocurrency industry, particularly for decentralized platforms that operate without clear regulatory oversight. Stakeholders are keenly watching this case, as it could set precedents for how similar platforms are treated under US law.
The total cryptocurrency market cap is valued at $2.27 trillion, reflecting the growing significance of digital assets in the global financial system.
