Tornado Cash Dev Wants Charges Tossed after Appeals Court Nixes Sanctions

The developer of mixing service Tornado Cash is arguing that the criminal case against him should be thrown out after an appeals court dropped U.S. sanctions targeting his creation.

Roman Storm co-founded Tornado Cash, which anonymizes cryptocurrencies by mixing them with others’ coins in a single pot and then divvying them back up to break the chain of custody traceable on blockchains. Its use by North Korean hackers led to the sanctions that were recently overturned.

In a Dec. 18 motion to dismiss the charges, Storm’s attorneys argue that the Fifth Circuit’s decision means none of the charges against him can go forward. Storm’s criminal trial is scheduled for April 14 in Manhattan’s Second Circuit.

The Fifth Circuit appeals court found that the sanctions on Tornado Cash by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) could not stand because it was not “property” and that its immutable smart contracts put the decentralized mixing service outside of the control of any one person.

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

The question is whether the Fifth Circuit’s ruling will be enough to invalidate all three charges against Storm. One of them, violating sanctions, seems very likely to be dismissed after the sanctions were deemed unlawful in the first place.

Money laundering and transmitting

The fate of the other two charges, money laundering and operating an unlicensed money transmitting business, is less clear.

The Second Circuit court in which Storm is being tried earlier “found that conspiracy to commit money laundering does not require the defendant to be ‘guilty of, involved in, or even aware of the specifics of, the specified activity.”

On the money laundering charge, Storm’s attorneys note that the Fifth Circuit disagreed, saying that knowing and willful action by a money launderer is required.

They argue that “the developers’ lack of control over the proceeds renders them legally incapable of conspiring to commit money laundering and negates the knowledge element of a money laundering charge.”

As for the unlicensed money transmitting business charge, Storm’s attorneys argue it should be dismissed because neither Tornado Cash nor its creators had any control over the immutable smart contracts that anyone can use.

Beyond that, the Fifth Circuit also found that Tornado Cash was not a “service” at all because no human effort is required, nor is human intervention even possible.