In a recent court proceeding, Roman Storm, a developer associated with Tornado Cash, entered a plea of “not guilty” in response to allegations of involvement in money transmission without proper licensing, facilitating money laundering, and evading sanctions. The defense emphasizes the intricate nature of the case, centered around utilizing Tornado Cash‘s cryptocurrency mixer by the widely recognized hacker group from North Korea, Lazarus.
The Tornado Cash Allegations
The United States government has filed charges suggesting that Lazarus employed Tornado Cash‘s platform to launder an amount approaching half a billion dollars. The prosecution contends that Storm continued the operation of this service even after gaining knowledge of Lazarus’s unauthorized activities.
A day after Storm pleaded not guilty, the U.S. FBI published a press article regarding Tornado Cash, reiterating the allegations, including detailed explanations.
According to the recently unsealed indictment, the duo had full knowledge that bad actors were using their services—and, consequently, understood they were violating sanctions—but decided to turn a blind eye to the money laundering.
FBI news story (link)
Released On Bail
Storm, who holds dual citizenship in the U.S. and Russia, has been released on a personal recognizance bond of $2 million, secured by his residential property in Washington state and co-signed by an individual deemed financially responsible. This decision was pronounced by Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York.
As a condition of his release, Storm is mandated to remain under house arrest in Washington and will undergo routine drug screenings. He is prohibited from possessing firearms and from establishing contact with any co-defendants, witnesses, or alleged victims. His travel is restricted to specific districts for the purpose of attending pre-trial hearings.
Storm was taken into custody approximately two weeks prior on charges that included conspiracy to facilitate money laundering, operating a money transmission service without the requisite license, and breach of sanctions. The prosecution alleges that Mr. Storm, in collaboration with fellow developers and co-founders Roman Semenov and Alexey Pertsev, assisted in laundering over $1 billion in misappropriated cryptocurrency, a significant portion of which is attributed to North Korea, through their contributions to Tornado Cash.
Tornado Cash, a decentralized protocol designed to ensure privacy in Ethereum transactions, has been the subject of increased scrutiny following these allegations. This case accentuates the ongoing discourse regarding the obligations of blockchain platforms to deter illicit utilization.
The Defense Line
The legal representatives of Storm are gearing up to contest the government’s interpretation of money laundering regulations as they pertain to digital currencies. They posit that the government’s approach may establish a concerning precedent that could hinder progress in the blockchain and cryptocurrency domains.
Brian Klein of Waymaker LLP, representing Storm, previously expressed concerns regarding the government’s utilization of an “unconventional legal theory” to prosecute an individual for software development activities.
Alexey Pertsev was detained in the previous year by Dutch authorities and is currently awaiting trial in The Netherlands. While Semenov has been indicted in connection with Storm, he remains at large.
