On April 5, three groups that promote blockchain technology came to Tornado Cash developer Roman Storm’s defense. They filed support documents in a US court, backing Storm’s efforts to dismiss the criminal charges against him.
These filings also explained why developers should be shielded from such legal trouble. The Blockchain Association asserted that the government’s case possesses a critical flaw. They warned that its adoption could adversely affect the crypto industry.
The group’s head of legal, Marisa Tashman Coppel, put forth a powerful argument. She stated that the government’s treatment of Tornado Cash as an unlicensed money transmitter is unwarranted, citing that under 18 USC § 1960 & FinCEN regulations, money transmitters must possess total independent control over user assets.
Elaborating further, she maintained that an entity cannot be classified as a money transmitter without the ability to autonomously relocate funds on a user’s behalf. Tornado Cash and its developers can’t control the funds since the system runs automatically and cannot be changed. In this setup, the users stay in control of their assets. These assets are kept in groups that are overseen by self-managed smart contracts.
CoinCenter’s argument
CoinCenter’s Director of Research, Peter Van Valkenburg, strongly argued that the US government has incorrectly labeled the Tornado Cash developers as being engaged in a criminal conspiracy. In a shared viewpoint with the Blockchain Association, Valkenburg and CoinCenter reduced the developers’ role in Tornado Cash’s operations to merely writing the platform’s smart contract-based pools.
Valkenburg showed that Tornado Cash’s tools and user interface are not essential to its operation. That means the defendants did not perform transactions, mix assets, accept funds, or distribute confidential notes, even if users utilized the platform for those actions. He likened Tornado Cash to TurboTax, a tool that aids users in preparing their taxes but cannot submit or pay them itself.
CoinCenter presented legal points that champion the notion of software creation as a form of free speech and support the allowance of exemptions for transactions involving only information. It positioned Tornado Cash on par with SWIFT, arguing that neither should face direct sanctions as they merely manage information.
DeFi Education Fund’s perspective on software misuse
The DeFi Education Fund made a case that developers shouldn’t be blamed when a third party misuses their software for illegal acts. Amanda Tuminelli, their Chief Legal Officer, pointed out that the US government has never used a specific law, the International Emergency Economic Powers Act, in a similar situation.
While examining over 100 different cases, the DeFi Education Fund found that the defendants were usually accused of dealing with a blacklisted party. However, the creators of platforms like Tornado Cash don’t have such partners.
Tornado Cash developer’s dismissal request
Storm and his legal team first tried to get the criminal charges thrown out on March 29. The court submissions from each advocacy group directly back up this attempt.
The case is still in the early stages, and it’s uncertain if the dismissal request will be approved. The US Justice Department accused Tornado Cash’s developer, Roman Storm, in August 2023. He is currently out on bail until his trial date in September. Interestingly, another member of the Tornado Cash team, Roman Semenov, was also charged by the US Department, but his current whereabouts are unknown.
The US Treasury and Office of Foreign Assets Control placed Tornado Cash under sanctions in August 2022. The reason was that the platform is believed to have concealed over $7 billion in cryptocurrency transactions since 2019. A small part of this activity was reportedly linked to the Lazarus Group, a North Korean hacking collective. Tornado Cash developers are now receiving support in court from blockchain advocacy groups.