Tornado Cash dev wants charges dropped after court said OFAC ‘overstepped’

Roman Storm, the co-founder of crypto mixing platform Tornado Cash, told a United States federal judge that his criminal charges should be dropped after an appeals court found sanctions against the platform’s smart contracts were unlawful.

Storm said in a Dec. 18 motion in a Manhattan district court that an opinion last month from the Fifth Circuit Appeals Court on a separate case finding the Treasury’s Office of Foreign Assets Control (OFAC) exceeded its authority in sanctioning Tornado Cash’s smart contracts “makes clear that all three counts of the indictment are fatally and legally flawed.”

He argued the opinion “most obviously impacts” his charge of conspiring to violate the International Emergency Economic Powers Act (IEEPA), a law central to the US sanctions apparatus, as the appeals court found the smart contracts “are not the ‘property’ of a foreign national or entity,” meaning they “cannot be blocked” under the law.

The Fifth Circuit said Tornado Cash’s smart contracts are unable to be changed or removed and can be used by anyone — including sanctioned North Korean hackers — while the creators “would be powerless to stop them,” adding:

“Mr. Storm could no more choose to stop them than he could choose to stop the sun from rising.”

A highlighted excerpt from Storm’s motion, Van Loon, is in reference to the appeals court case. Source: CourtListener

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.”

Storm is also charged with conspiring to operate an unlicensed money-transmitting business and money laundering conspiracy. He said that this, too, should be scrapped.

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.”

Related: US Treasury under Trump could take a different approach to Tornado Cash 

The Fifth Circuit ruling came from a case launched by six Tornado Cash users — with backing from Coinbase — against the Treasury and OFAC in September 2022. They initially lost the case and then appealed it in November 2023.

The US charged Storm and fellow co-founder Roman Semenov in August 2023, accusing them of helping launder over $1 billion in crypto through Tornado Cash, including for the North Korean-linked hacking collective the Lazarus Group.

Semenov, a Russian national, is at large. Tornado Cash’s third co-founder, Alexey Pertsev, was arrested in the Netherlands on related charges in August 2022 and remains in pre-trial detention.

Magazine: Tornado Cash 2.0 — The race to build safe and legal coin mixers