DOJ presses Tornado Cash prosecution as Treasury drops mixer reporting plan
Federal prosecutors are utilizing a brand new Bitcoin Fog attraction to defend attempting two counts in opposition to Roman Storm in New York. Their Oct. 5 letter asks Judge Katherine Polk Failla to reject his venue problem on the money-laundering and money-transmission conspiracy counts. Storm co-founded Tornado Cash, a cryptocurrency mixer that obscures transaction trails.
The submitting arrived as Treasury moved to withdraw a broad mixer-reporting proposal. The persevering with case activates prosecutors’ allegation that Storm knowingly participated in legal exercise, whereas the coverage adjustments acknowledge lawful privateness and restrict explicit charging selections. Whether his software program work crossed that legal boundary stays disputed.
Storm, posting as @rstormsf, described potential imprisonment as punishment “for writing code” and contrasted the case with Treasury’s retreat. His criticism captures the stakes for privateness builders, however the newest submitting issues the place the case might be tried.
Storm already has an August 2025 conviction on one money-transmission conspiracy rely carrying a statutory most of 5 years. An Aug. 25, 2026 court order scheduled his retrial for April 26, 2027, citing his pending acquittal movement and requested continuance.
Southern District of New York prosecutors depend on the D.C. Circuit’s Sept. 25 decision in United States v. Sterlingov, involving Bitcoin Fog, a unique cryptocurrency mixer. Prosecutors cite its venue holdings as persuasive authority for Storm’s pending problem.
Their argument facilities on a Manhattan buyer, Shakeeb Ahmed. They say his deposits helped enlarge the anonymity pool, making funds more durable to hint, though the cash remained there solely briefly. They additionally argue that serving a buyer within the district helps venue for the money-transmission rely.
Why the crypto coverage shift has not ended the case
Treasury’s Financial Crimes Enforcement Network is withdrawing its 2023 discovering and proposed enhanced reporting and recordkeeping measure for worldwide cryptocurrency mixing. The withdrawal notice, filed Oct. 5 for Oct. 6 publication, cites issues a couple of “chilling impact on reputable exercise” and burdens on monetary establishments.
FinCEN acknowledges lawful monetary privateness whereas retaining monitoring for cash laundering, terrorist financing and different illicit exercise. The withdrawal addresses an administrative reporting proposal. It doesn’t repeal legal offenses or resolve Storm’s case.
DOJ’s personal shift accommodates an identical boundary. Deputy Attorney General Todd Blanche’s April 7, 2025 memo directed prosecutors away from focusing on mixers for his or her customers’ conduct or unwitting regulatory violations and known as for overview of ongoing instances.
But the memo expressly excludes part 1960(b)(1)(C), regarding funds identified to return from crime or meant for illegal exercise, from its regulatory charging restriction.
In August 2025 remarks, DOJ official Matthew Galeotti added safety in opposition to new expenses below that provision for qualifying software program: it should be actually decentralized, solely automate peer-to-peer transactions, and go away the third occasion with out custody and management over person belongings. Other expenses might stay acceptable the place legal intent exists.
That conditional promise about new expenses didn’t put aside Storm’s current conviction.
DOJ described Storm’s conduct as constructing, sustaining and making the most of a service regardless of understanding it transmitted legal proceeds. Storm contests legal therapy of his developer exercise.
The April 9, 2026 hearing exposes the breadth of the federal government’s concept. Prosecutor Ben Arad argued that reputable deposits helped conceal legal funds, supporting his case in opposition to the builders. He expressly distinguished harmless depositors’ information and perspective from that of Storm and his alleged coconspirators.
The dispute due to this fact facilities on the builders’ accountability for working and enhancing a service utilized by criminals.
Failla challenged whether or not the broader concept established willful conduct. Arad later emphasised lively steps to take care of and enhance the service, moderately than merely leaving its swimming pools operational. The choose scrutinized the federal government’s concept.
Why Ulbricht’s pardon is totally different
The comparability with Ross Ulbricht raises a separate query of particular person clemency. Trump’s Jan. 21, 2025 pardon granted particular person clemency to Ross Ulbricht for specified convictions. It didn’t prolong to Storm or set up a normal exemption for crypto builders.
The subsequent consequential developments are judicial selections on the challenges and any adjustments to that schedule. Washington’s help for lawful crypto privateness has not itself settled the contested legal case.
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