US court denies Tornado Cash founder’s motion to dismiss criminal case

What’s new? Judge Katherine Polk Failla of the Southern District of New York has denied a motion by Tornado Cash crypto mixer founder Roman Storm to dismiss the DOJ’s criminal charges against him. “At this stage in the case, this court cannot simply accept Mr. Storm's narrative that he is being prosecuted merely for writing code,” Failla said.

CoinDesk’s material

What else is known? Storm’s defense argued that prosecution for writing code equates to prosecution for speech and is impermissible under the First Amendment to the US Constitution. However, Failla argued that the code’s functionality did not fall within the amendment’s definition of speech.

“The government has a substantial interest in promoting a secure financial system by combating money laundering, by combating the operation of unregistered money transmitting services and by combating the evasion of sanctions. These interests are wholly unrelated to the suppression of free expression, and the applicability of these laws to destroy conduct does not burden substantially more speech than necessary,” the judge said.

According to the judge, Tornado Cash is not materially different from other financial institutions providing money transfer services and is not a non-profit enterprise.

US authorities charged Storm with conspiracy to launder money, operating an unlicensed money transfer business, and violating sanctions. He was arrested last August and later released on bail.

Similar charges have been brought against his colleague Roman Semenov, who is outside the United States. The developers were accused of knowingly facilitating the laundering of more than $1 billion in criminal proceeds, including those from Lazarus, a DPRK-based hacker group linked to the financing of the government’s weapons program.

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Storm denies the charges and insists that he was only involved in writing the code, which was then used for criminal purposes by third parties, which is outside his area of expertise. Following Failla’s decision to deny the motion, the case will go to a jury trial.

The trial will begin December 2 and is expected to last two weeks. If Storm is found guilty on all three charges, he faces a maximum sentence of 45 years in prison.

In addition, the judge denied Storm’s other appeal, in which he is asking the US Justice Department to provide his attorneys with documents from the Dutch prosecutor’s office, which previously sentenced Alexey Pertsev, the third Tornado Cash developer, to 5 years and 4 months in prison for money laundering.

Pertsev was the first of the Tornado Cash team to be arrested, days after the US Department of Justice placed the service on a sanctions list in August 2022. Rallies were held in his defense and prominent members of the crypto industry spoke out, but the court found him guilty.

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Moreover, the court now refuses to release Pertsev on bail and, according to his lawyers, prevents him from preparing an appeal. In particular, the developer is not given access to a computer and the Internet to help his lawyers draft an appeal against the verdict. They themselves are unable to do so because of the many complex technical aspects of the case, which only the defendant understands.

Failla called Storm’s arguments in the second motion speculative. In her opinion, he failed to prove that the materials received from the Dutch authorities would be relevant to his own case.