Tornado Cash developer Roman Sturm, who was arrested in August and charged with three charges related to his role as co-founder of Ethereum's privacy protocol, Tornado Cash, received support in the form of three amicus briefs from prominent pro-crypto organizations.
Storm proposed dropping the charges against him last week, claiming the government's argument was “fatally flawed” in its description of the Tornado Cash service and various elements of blockchain technology. Roman Semenov, a Russian citizen and co-founder of Tornado Cash who has been charged with the same charges, remains at large, while Alexei Burtsev, another co-founder, is awaiting the results of his trial in the Netherlands with a ruling expected in May. 14.
The three amicus briefs were submitted by the Coin Center, the Blockchain Association, and the DeFi Education Fund. Although the briefs are written and filed separately, they present broadly similar arguments against the government's description of the case in the indictment.
For example, the government indictment alleges that Semenov and Storm “engaged in the business of transmitting money on behalf of the public” but Tornado Cash was not registered with the U.S. Financial Crimes Enforcement Network (FinCEN), leading to its conspiracy charge. To operate an unlicensed money transfer company.
However, the Blockchain Association notes, in its brief, that this characterization conflicts with FinCEN's own definitions. “Unless the intermediary exercises complete independent control over the assets, liability cannot be attached to the transfer of funds,” the memo said. “In fact, FinCEN’s own guidance recognizes that ‘anonymisation software suppliers are not money movers’.
The brief explains in great detail how Tornado Cash operates without giving its developers independent control over any user assets, and threatens that if the government's position that Tornado Cash is a money transfer business persists, “…compliance with the Bank Secrecy Act may be impossible for developers, meaning “The government's interpretation is equivalent to a ban on anonymization protocols.”
The Coin Center brief focuses on the arguments against the charge of conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and provides a First Amendment defense to the charges. The conspiracy charge, which has to do with Tornado Cash's alleged sanctions violations, should not stand as “deployment decisions about the functionality of the software and how to release it were made well before any knowledge of the matter.” [North Korean state-sponsored hackers] The brief argues that the Lazarus Group's activities could have already existed.
To say that Tornado's founders colluded with Lazarus would be like suggesting “open source Linux developers allied with the Iranian regime once released a valuable computing tool offshore that Iran would later use to run its weapons-related computers.” Programs,” the brief continues.
The DeFi Education Fund's brief, in arguing against these charges, offers a bleak outlook on how the legal world will change if Storm loses his case. “These theories of liability — if certified by the court — would give the government unlimited power to prosecute any software developer who writes code that is later used by a third party for nefarious purposes, simply because the developer later becomes aware of that use.” reads the summary. “With no set principle, almost all developers who create open source software will be exposed to criminal liability for activity beyond their control years or decades later.”
Government prosecutors have not yet responded to Storm's request to drop the charges against him.
Disclaimer: The Block is an independent media outlet that provides news, research and data. As of November 2023, Foresight Ventures is the majority investor in The Block. Foresight Ventures is investing in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is a core program of Foresight Ventures. The Block continues to work independently to provide objective, influential and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.
