As a seasoned researcher with a keen interest in the intricacies of cryptocurrency and blockchain technology, I find myself deeply engaged in the ongoing legal saga of Roman Storm, co-founder of Tornado Cash. The recent ruling by the Fifth Circuit Appeals Court, which found sanctions against Tornado Cash’s smart contracts to be unlawful, has raised some fascinating questions about the boundaries and authority of regulatory bodies in the digital age.
Roman Storm, one of the founders of the cryptocurrency tumbler known as Tornado Cash, has requested that all criminal charges against him be dismissed. This is because a U.S. appeals court ruled that sanctions imposed on Tornado Cash’s smart contracts were illegal.
Storm contended, in a court filing dated December 18th in a Manhattan district court, that a ruling from the Fifth Circuit Appeals Court in a different case last month, which determined that the Treasury’s Office of Foreign Assets Control (OFAC) overstepped its authority when sanctioning Tornado Cash’s smart contracts, strongly suggests that all three charges levied against them in the indictment are fundamentally and legally flawed.
He contended that his charge of conspiring to breach the International Emergency Economic Powers Act (IEEPA), a key U.S. sanctions law, was significantly influenced by the fact that the appeals court ruled that smart contracts are not considered “property” owned by foreign nationals or entities. Consequently, they cannot be restricted under this law.
The Court of Appeals for the Fifth Circuit stated that the code of Tornado Cash, a cryptocurrency mixing service, is immutable and accessible to all users, even those under sanctions such as North Korean hackers. The creators of Tornado Cash would have no ability to alter or remove these smart contracts once deployed.
“Mr. Storm could no more choose to stop them than he could choose to stop the sun from rising.”
In his motion, Storm argued that the district court said it couldn’t rule on whether Tornado Cash was immutable when it denied his motion to dismiss in September but the appeals court opinion “decided as a matter of law” that it was.
“There is nothing left for the jury to decide on this issue.”
The storm is also accused of planning to run an illegal money transferring service without a license, as well as money laundering, and it has suggested that these charges should similarly be dismissed.
He argued that “Tornado Cash is not a financial institution” and that “there could be no agreement to commit money laundering because the Tornado Cash protocol became immutable in May 2020, four months before the alleged start of the conspiracy.”
In September 2022, a legal action was initiated by six individuals who used Tornado Cash (backed by Coinbase) against the Treasury and OFAC. The initial verdict was not in their favor, but they chose to appeal the decision in November 2023.
In August 2023, the United States indicted Storm and their co-founder Roman Semenov, alleging they facilitated the laundering of more than a billion dollars in cryptocurrency via Tornado Cash. This includes transactions linked to the North Korean hacking group, Lazarus.
Semenov, a Russian citizen, remains unapprehended. In connection with similar allegations, Alexey Pertsev, one of Tornado Cash’s three founders, was apprehended in the Netherlands back in August 2022 and is currently being held prior to trial.
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2024-12-20 06:07