The United States’ case against crypto mixer Tornado Cash and developer Roman Storm raises concerns from DeFi Education Fund legal chief Amanda Tuminelli. In a series of posts on X, Tuminelli criticized the Department of Justice (DOJ) for what she sees as technical inaccuracies, disregard for privacy, and misapplication of the law.
According to Amanda Tuminelli, the legal head of DeFi Education Fund, the United States’ rationale for pursuing its case against crypto mixer Tornado Cash and developer Roman Storm is perceived as demonstrating a “disregard for privacy” and contains some “extraordinarily strong allegations.”
On April 26, I came across a report stating that the Department of Justice had argued against Storm’s attempt to dismiss conspiracy and money laundering charges. Tuminelli, in his X posts on April 27, expressed concerns over what he perceived as numerous technical inaccuracies, contempt for privacy, and misapplications of the law in these arguments.
Tuminelli pointed out on X that the DOJ acknowledged Storm’s stance, which maintained that misconduct using computer software is entirely shielded from legal intervention, and cryptocurrency being an inherent domain outside the grasp of law enforcement.
“In his motion, Storm made it clear that this was not the case. It’s hard for me to believe this is an honest representation of his argument.”
As a researcher studying the case involving Tuminelli and the allegations against him and his co-founder, Roman Semenov, regarding their involvement with Tornado Cash, I cannot help but express my concern over the apparent misunderstanding of immutable smart contract protocols by the prosecution. These protocols are designed to function automatically and unalterably once deployed.
The DOJ disregards entirely the points made in the DeFi Education Fund’s friend-of-the-court brief, advocating for Storm’s charges to be dropped. Tuminelli interprets this as a flattering gesture from the DOJ.
The advocacy group contended in their argument that the International Emergency Economic Powers Act (IEEPA), which grants the president the authority to regulate during “unusual and extraordinary” threats, should not be applied to penalize a software developer who had no direct dealings or solicitation of business with a sanctioned entity.
“Seminal crypto court case”
As a crypto investor, I’ve been closely following the recent development in the ongoing legal case. Among the many sections in the 111-page response from the prosecutors, one particular part has piqued my interest and that of many other observers in the crypto community. This section, if implemented, could potentially have significant ramifications for the crypto and internet freedom landscape as we know it.
As a crypto investor, I understand that according to the DOJ’s interpretation under U.S. law, I don’t necessarily need to have control over the funds I’m transferring for it to be considered money transmission. Instead, if I’m transferring funds on behalf of the public using any means, then I might fall under this category.
As a seasoned industry observer, I expressed my concerns in a recent X post on April 27th. The Department of Justice’s expansive interpretation, if adopted, could potentially establish harmful precedents, threatening the fundamental freedoms that underpin the internet.
“Any entity transmitting financial data, such as internet service providers, may find themselves subject to Know Your Customer (KYC) regulations, according to the statement. Sending a check for $50 through the mail doesn’t make the postman a money service provider, but it could implicate them in financial transactions.”
As a financial analyst, I’ve come across John Paul Koning’s perspective on the ongoing legal battle against Storm. In his view, this case could set a significant precedent in the crypto world, focusing on the question of liability when it comes to smart contracts and the interfaces used to access them.
According to decentralized applications legal expert Gabriel Shapiro, expressed in X, his concerns over the Department of Justice’s (DOJ) arguments potentially classifying decentralized application operators as money transmitters have not arisen yet.
The outcome of the case hinged on the role of the relays and the Tornado Cash (TORN) tokens used by the crypto mixer.
“Relayers handled Ethereum transactions on behalf of users, including covering gas fees, according to Shapiro. TORN offered incentives for this relaying service.”
On most Decentralized Applications (DApps), users conduct transactions on Ethereum network instead. For instance, they pay the gas fees themselves or use nodes managed by their digital wallet operators rather than the DeFi application operators.
“Shapiro noted that [Relayers] effectively covered gas fees for users. However, whether this qualifies as ‘money transmission’ under the law remains to be seen. At a minimum, it seems to border on that definition.”
Storm’s trial is currently slated for September. Semenov is still at large.
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2024-04-29 06:06