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Ruholamin Haqshanas
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Ruholamin Haqshanas
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Roman Storm, co-founder of the crypto mixing platform Tornado Cash, is urging a U.S. federal judge to dismiss all criminal charges against him.
The appeal comes after a ruling by the Fifth Circuit Appeals Court, which found that sanctions imposed on Tornado Cash’s smart contracts by the Treasury’s Office of Foreign Assets Control (OFAC) were unlawful.
In a motion filed on December 18 in a Manhattan district court, Storm argued that the appeals court decision exposes fatal flaws in the legal basis for the charges against him.
Legal Charges are Legally Flawed
His legal team asserted that the ruling “makes clear that all three counts of the indictment are fatally and legally flawed.”
Central to Storm’s argument is the charge of conspiring to violate the International Emergency Economic Powers Act (IEEPA) — a key component of U.S. sanctions enforcement.
The appeals court concluded that Tornado Cash’s smart contracts are immutable, meaning they cannot be altered or controlled by any person or entity.
The court noted that these contracts are not “property” under the IEEPA, and therefore, cannot be subject to sanctions.
The “creators [of Tornado Cash] would be powerless to stop [the smart contracts],” the Fifth Circuit stated, adding, “Mr. Storm could no more choose to stop them than he could choose to stop the sun from rising.”
Storm contends that this ruling should also result in the dismissal of charges related to operating an unlicensed money-transmitting business and conspiracy to commit money laundering.
He argued that Tornado Cash is not a financial institution and emphasized that the protocol became immutable in May 2020 — four months before the alleged conspiracy began.
As a result, he claims there was no possible “agreement” to launder money using the platform.
The Fifth Circuit’s ruling was the result of a legal battle launched in September 2022 by six Tornado Cash users, backed by Coinbase, against the U.S. Treasury and OFAC.
Although they initially lost the case, the ruling was overturned in November 2023, marking a significant victory for Tornado Cash supporters.
DOJ Files Charges Against Tornado Cash Devs
The U.S. Department of Justice charged Storm and fellow co-founder Roman Semenov in August 2023, accusing them of helping launder over $1 billion in cryptocurrency, including funds linked to North Korean hacker group Lazarus.
Semenov, a Russian national, remains a fugitive. Tornado Cash’s third co-founder, Alexey Pertsev, was arrested in the Netherlands in August 2022 and is currently in pre-trial detention.
In 2022, the U.S. Treasury’s OFAC sanctioned Tornado Cash, citing its role in enabling anonymous cryptocurrency transactions. The agency acted after Tornado Cash facilitated the laundering of over $7b in virtual currency since 2019.
The sanctions targeted Tornado Cash for failing to implement strong controls against misuse by cybercriminals.
Despite its public focus on privacy, the platform was repeatedly used to launder cybercrime proceeds.
