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Home»Legal»Tornado Cash Dev Roman Storm Moves to Dismiss Indictment Over Crypto-Laundering Allegations
Legal

Tornado Cash Dev Roman Storm Moves to Dismiss Indictment Over Crypto-Laundering Allegations

NBTCBy NBTC02/04/2024No Comments4 Mins Read
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Tornado Cash developer Roman Storm’s legal team filed a motion Friday to dismiss a criminal indictment alleging he conspired to commit money laundering and violate sanctions.

Storm was arrested last year over his work with Tornado Cash, which has been used by North Korean hackers and other groups to launder funds.

Storm did not work with these groups, but rather just published code that anyone can use, the filing said.

Building Tornado Cash, a tool that can be used to obscure the origin and destination of cryptocurrency transfers, is not the same as laundering money, said a motion to dismiss the criminal indictment against developer Roman Storm.

Storm and fellow developer Roman Semenov were indicted last summer on charges of conspiring to commit money laundering, conspiring to operate an unlicensed money transmitter and conspiring to violate the International Emergency Economic Powers Act (in other word, to violate U.S. sanctions). Storm was arrested and released on bail. The U.S. Department of Justice, alleged that Tornado Cash facilitated the laundering of over $1 billion by groups like North Korea’s Lazarus. Tornado Cash has been sanctioned by the U.S. Treasury Department multiple times now.

“Storm is a developer, and his only agreement, together with the members of his U.S-based company, was to build software solutions to provide financial privacy to legitimate cryptocurrency users,” Friday night’s filing in the Southern District of New York said. “This is not a crime.”

The motion defines Tornado Cash, describing it as a “set of non-custodial smart contracts in which users maintain complete ownership and control over their assets without the need to rely on any service provider or other intermediary,” as opposed to custodial mixing services. The filing also disputed the idea that Tornado Cash is a mixer or a service.

It took aim at how the indictment described the Tornado Cash setup and Storm’s ability to influence it by the time period the indictment focuses on, saying that Storm did not have the ability to control Tornado Cash or prevent its use by Lazarus and similar entities.

Moreover, the filing said, Tornado Cash does not fit the definition of a “financial institution” because users maintain control over their funds and the protocol “did not charge any fee but was a free and open-source software tool.”

Storm couldn’t have conspired to launder funds or operate a money transmitter if there wasn’t a Tornado Cash enterprise for him to have done these with, the filing said.

The filing also argued that Storm and other developers at Peppersec – the company set up by the developers – never made an agreement with “alleged bad actors,” saying the U.S. DOJ was “conflating the agreement to develop and publish Tornado Cash code with a (non-existent) agreement to engage in purported concealment money laundering.”

The charges against Storm are similar to those against fellow Tornado Cash developer Alexey Pertsev, who was arrested in August 2022 and went on trial this past week on money laundering charges. A verdict will be announced in May. Friday’s filing noted that the law in the Netherlands, where Pertsev was arrested and tried, is different from the U.S. in terms of the specific charges.

Friday’s motion to dismiss came shortly after Storm’s legal team filed motions to have the DOJ produce certain pieces of evidence and suppress federal agents’ efforts to seize Storm’s crypto holdings through a search warrant.

The motion to compel asks for a judge to order the DOJ to share any communications between U.S. authorities and Dutch authorities, as well as any communications from the Treasury Department’s Office of Foreign Asset Control or Financial Crimes Enforcement Network tied to Storm.

The motion to suppress argued that a search warrant was not the appropriate tool for the FBI to seize “any and all cryptocurrency” found in Storm’s home. While the warrant “allows for the seizure of ‘any and all cryptocurrency,'” this is “overbroad” and an affidavit does not “establish probable cause to believe that any and all cryptocurrency found would constitute evidence of a crime.”

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NBTC is the editorial account for NBTC News, covering Bitcoin, Ethereum, DeFi, blockchain infrastructure, exchanges, mining, regulation and digital asset markets. The editorial team focuses on clear sourcing, timely updates and practical context for crypto readers.

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