In a recent 111-page filing, government prosecutors have countered Tornado Cash co-founder Roman Storm’s motion to dismiss charges of conspiracy and money laundering against him.
Storm, who faces charges alongside co-founder Roman Semenov (who remains at large), is accused of conspiracy to commit money laundering, conspiracy to violate the International Economic Emergency Powers Act (IEEPA), and conspiracy to operate an unlicensed money transmitting business. These charges carry substantial prison sentences.
Despite support from crypto investors and industry groups, including financial contributions for his legal defense and amicus briefs, government prosecutors led by U.S. Attorney Damian Williams argue that Storm’s involvement in Tornado Cash goes beyond mere code development. They assert that Storm played an active role in promoting and profiting from Tornado Cash, knowing it facilitated the laundering of illicit funds from cyberattacks.
The prosecution contends that Tornado Cash operated as a for-profit enterprise, with Storm benefiting financially from its operations. They emphasize that while direct access to Tornado’s smart contracts was possible, most users utilized the platform’s interface, with a majority also using a relayer network managed by individuals manually approved by Tornado’s co-founders until March 2022.
Despite Storm’s motion challenging the characterization of Tornado as a money-transmitting business, prosecutors argue otherwise, stating that the service facilitated fund transfers automatically, constituting the operation of such a business.
Additionally, the government highlights various actions taken by Semenov and Storm to sustain Tornado Cash, including funding the website’s hosting, covering transaction fees, neglecting anti-money laundering measures, and continually developing features to maintain anonymity. These actions persisted even after they became aware of Tornado’s role in laundering proceeds from significant hacks.
The prosecution points to Storm’s alleged acknowledgment of the illegal activity, citing a message he sent to other Tornado Cash founders after learning about the laundering of funds from a specific cyberattack.
Regarding attempts to mitigate illegal use, the indictment mentions efforts to screen out wallets sanctioned by the Office of Foreign Assets Control (OFAC). However, prosecutors argue that such measures were ineffective in preventing illicit activity by certain groups, including the Lazarus Group.
Contrary to assertions by crypto advocacy groups framing the case as an attack on code development freedom, prosecutors emphasize that Storm’s charges are not solely based on coding activities but rather on his active involvement in operating and profiting from a platform facilitating illegal transactions.
Prosecutors warn against interpreting Storm’s actions as lawful simply because they involved coding, asserting that such an interpretation would undermine efforts to enforce criminal and regulatory measures related to computer-based activities.
Ultimately, the prosecution paints a picture of Tornado Cash’s substantial profits, alleging that Storm transferred millions of dollars to unidentified cold wallets and used a VPN and false identity to cash out proceeds on Binance.
In summary, the government’s response portrays Storm’s involvement in Tornado Cash as more than just code development, emphasizing his active role in operating a platform that facilitated illicit transactions, and advocating for enforcement measures to address such activities effectively.
