Court Rejects Tornado Cash Co-Founder’s Motion to Dismiss Case

The hearing against Tornado Cash co-founder Roman Storm is set to commence on December 2 in New York, following a judge’s decision to reject his motion to dismiss the case.

In the US v. Storm (Tornado Cash) hearing just now, the court rejected the arguments in Storm’s motion to dismiss as a matter of law and heavily punted what she said were factual issues for trial (“To the extent Storm is asking me to decide a controverted issue of fact, I am not… https://t.co/enpBby3Gue

— Amanda Tuminelli (@amandatums) September 26, 2024

Amanda Tuminelli, Chief Legal Officer of the DeFi Education Fund, noted that during a teleconference on September 26, Judge Katherine Polk Failla of the Southern District of New York found the defense’s arguments insufficient to dismiss the criminal charges.

In July, Storm’s lawyers requested a postponement of the proceedings, citing “complex legal and factual issues” and “millions of pages of documents.”

The judge dismissed new arguments by the Tornado Cash co-founder regarding freedom of speech. He claimed that the First Amendment of the US Constitution protects his rights as a software developer.

However, Failla opined that the “functional capability” of the code does not fall under the amendment’s protections.

“Let me put it simply: the government did not need to allege that Storm conspired with any users to promote or facilitate illegal objectives, nor did they need to allege that he was aware of the specific nature or was a participant in the underlying criminal activity. Instead, the government must prove that Storm knew about the proceeds of some crime,” the judge clarified.

She also added that federal efforts to combat money laundering and sanctions evasion are “entirely unrelated” to suppressing free speech.

Failla believes that Tornado Cash is “significantly different” from other financial services or money transfer companies, writes CoinDesk.

“At this stage of the case, the court cannot simply accept Storm’s version that he is being prosecuted solely for writing code. If the jury ultimately accepts this version, they will deliver an acquittal. But I have no grounds to decide this as a matter of law,” she emphasized.

Jake Chervinsky, Chief Legal Officer of Variant Fund, described the dismissal of the motion as an “assault on the freedom of software developers worldwide.”

“This [process] will go down in history as a perversion of law and a travesty of justice,” the executive added.

In August 2022, the OFAC sanctioned the Tornado Cash website, which, according to the agency, was used by criminals to launder over $7 billion in cryptocurrency. More than $455 million of this was linked to the North Korean hacker group Lazarus Group.

In the same month, Dutch authorities arrested mixer developer Alexey Pertsev.

On May 14, 2024, he was found guilty of laundering $1.2 billion through Tornado Cash and was sentenced to 64 months in prison. In July, the court denied Pertsev bail pending an appeal.

Storm and another co-founder of the mixer, Roman Semenov, also face charges of money laundering and sanctions violations in the US.

Storm was released on bail but refused to plead guilty. Semenov remains free but has been sanctioned.