DOJ Defends Tornado Cash Prosecution Amid Treasury Policy Shift

The U.S. Department of Justice is pushing forward with its prosecution of Roman Storm, co-founder of the cryptocurrency mixer Tornado Cash, despite the Treasury's recent withdrawal of a proposed reporting plan for similar services. Federal prosecutors filed a letter on Oct. 5 asking Judge Katherine Polk Failla to reject Storm's challenge to the venue for his trial on money-laundering and money-transmission conspiracy counts. The case hinges on whether Storm's software development knowingly facilitated criminal activity, a claim he disputes.

Storm, who has been posting under the handle @rstormsf, described the potential imprisonment as punishment “for writing code” and contrasted the case with the Treasury's retreat on mixer reporting. The Treasury's Financial Crimes Enforcement Network (FinCEN) withdrew its 2023 proposal due to concerns about a “chilling effect on legitimate activity” and burdens on financial institutions. The withdrawal, however, does not repeal criminal offenses or decide Storm's case.

The DOJ's own policy shift, outlined in a memo by Deputy Attorney General Todd Blanche, directs prosecutors away from targeting mixers for their users' conduct or unwitting regulatory violations. However, the memo excludes certain provisions concerning funds known to come from crime or intended for unlawful activity. The DOJ argues that Storm's conduct involved building, maintaining, and profiting from a service despite knowing it transmitted criminal proceeds.

The next consequential developments in the case will likely come from judicial decisions on the challenges and any changes to the trial schedule. The case raises broader questions about the responsibility of developers for the use of their software by criminals, even as the government acknowledges the importance of lawful financial privacy.