Today, in the Southern District of New York (SDNY), Tornado Cash co-founder Roman Storm was found guilty on the second count of his indictment: conspiracy to operate an unlicensed money transmitting business. The jury did not reach a unanimous verdict on the other two counts — conspiracy to commit money laundering and conspiracy to violate sanctions. After three and a half days of deliberation following a trial that began in mid-June, the verdict was delivered. Storm now faces up to five years in prison as a result of the money transmission conviction.
Judge Failla Rejects Motion to Remand Storm
Immediately after the verdict, the prosecution moved to remand Storm into custody, arguing that he now posed a flight risk. Defense attorney Ms. Klein pushed back, noting that Storm had little incentive to flee: his Washington state home is tied up in a $2 million bail bond; his daughter (with partial custody) and girlfriend are based in the U.S.; his parents are green card holders; and much of the crypto community that supports Storm is based in the U.S., with hopes they will continue supporting him during an appeal. The prosecution countered that Storm now had greater incentive to flee since he had been convicted. However, Judge Failla was not convinced, stating that “the stability of the verdict is still in play” (likely referring to an expected appeal) and that Storm's “incentives have shifted tremendously.” She subsequently denied the prosecution's motion.
U.S. Attorney for the SDNY Chimes In
Shortly after the verdict, U.S. Attorney for the SDNY (and former SEC chairman) Jay Clayton issued a statement: “Roman Storm and Tornado Cash provided a service for North Korean hackers and other criminals to move and hide more than $1 billion of dirty money.” He added: “The speed, efficiency, and functionality of stablecoins and other digital assets offer great promise, but that promise cannot be an excuse for criminality. Criminals who use new technology to commit age-old crimes, including hiding dirty money, undermine the public trust, and unfairly cast a shadow on the many innovators who operate lawfully. This Office and our partner agencies are committed to holding accountable those who exploit emerging technologies to commit crime.” Notably, Clayton did not acknowledge the memo issued by U.S. Deputy Attorney General Todd Blanche, which stated that the DOJ would “stop participating in regulation by prosecution” in the crypto space and would no longer target virtual currency mixing services for the acts of their end users. He also did not mention that the vast majority of funds that moved through Tornado Cash were not proven to have been obtained illicitly. The case continues to raise questions about legal accountability for developers of privacy-focused protocols.