The U.S. Department of Justice has brought charges against Roman Storm, one of the developers of Tornado Cash, a decentralized mixer for privacy in financial transactions. The central question in this case revolves around whether Storm developed software or controlled a service.
Storm, along with Roman Semenov, was charged with conspiracy to commit money laundering, operating an unlicensed money transmitting business, and violating sanctions regulations. Storm pleaded not guilty and filed a motion to dismiss the case in March.
The prosecution alleges that Storm and his team were aware of malicious actors, including the Democratic People’s Republic of Korea (DPRK), using Tornado Cash for money laundering. They argue that Tornado Cash functioned as a business providing a service. However, the defense contends that Storm created privacy software for financial transactions, which was made available for public use.
During a recent hearing, the defense emphasized that Storm had no control over Tornado Cash after a certain point and that the system’s pools were immutable, meaning Storm couldn’t be held criminally liable for users’ actions. The defense also raised comparisons with encrypted messaging app WhatsApp, questioning the prosecution’s stance on liability for software creators.
Liability and Control
The prosecution argued that any business aware of criminal activity must take steps to prevent it. However, the defense questioned the extent of Storm’s control over Tornado Cash and whether he could be held responsible for users’ activities. The judge raised points about when a service should shut down upon knowledge of criminal use and explored the threshold for criminal liability.
WhatsApp Hypothetical
An interesting comparison was made between Tornado Cash and WhatsApp, highlighting the complexities of holding software creators accountable for user actions. The encryption in WhatsApp was cited as a factor that differs from Tornado Cash, raising questions about the legal implications of such technology.
Document Production
Additionally, the defense requested the production of evidence from other government agencies and foreign entities to support their case. They sought materials related to mutual legal assistance treaties and information from agencies like the U.S. Treasury Department. The prosecution argued against sharing certain documents, citing diplomatic sensitivities and existing case law.
The judge deferred decisions on these requests, promising prompt rulings. The trial date was moved to December, with expectations of a two-week trial. Both parties presented their arguments, and the judge indicated a willingness to consider various perspectives before making her decisions.