DOJ Presses Charges Against Tornado Cash Co-Founder Despite Policy Shift

The US Department of Justice (DOJ) has decided to proceed with criminal charges against Roman Storm, the developer and co-founder of Tornado Cash. This decision comes despite an internal memo circulated last month, which suggested a potential shift in the agency's approach to cases involving crypto mixing services. Storm is set to face trial on federal charges, including money laundering and sanctions evasion.

Federal prosecutors allege that Storm conspired to launder funds, evade US sanctions, and operate an unlicensed money transmitting business through Tornado Cash. This Ethereum-based coin mixer is designed to obscure the origin and destination of crypto transactions. Storm's trial is scheduled to begin in a Manhattan federal courtroom in less than two months. Prosecutors have agreed to drop one portion of the charge related to operating an unlicensed money transmitting business, acknowledging inconsistencies with federal guidelines.

The Financial Crimes Enforcement Network (FinCEN) clarified in 2019 that “non-custodial entities” such as Tornado Cash are not classified as money transmitters. This clarification highlights a tension between law enforcement and developers of decentralized software. Amanda Tuminelli, executive director of the DeFi Education Fund, stated that technologists building neutral privacy tools should not be held to “unreasonable criminal standards.” This sentiment is echoed by industry leaders, including Ethereum co-founder Vitalik Buterin, who continues to support Storm.

The DOJ’s decision to continue with the charges against Storm follows the leak of an internal memo indicating the agency would now prioritize pursuing individuals using crypto tools for criminal purposes rather than prosecuting the platforms themselves. This shift has been interpreted as a sign of evolving policy. However, the DOJ does not intend to drop its charges against Storm.

In September, US District Judge Katherine Polk Failla denied Storm's motion to dismiss, ruling that the use of computer code to facilitate money laundering is not protected under the First Amendment, despite Storm’s claims of free speech protections for his code. The US Treasury sanctioned Tornado Cash in 2022, claiming that the protocol had facilitated more than $7 billion in illicit transactions. However, in March, the Office of Foreign Assets Control quietly removed Tornado Cash from its sanctions list following a federal appeals court decision that found immutable smart contracts cannot be sanctioned as property.

Storm’s co-developer, Alexey Pertsev, was sentenced to over five years in prison by a Dutch court last year but was released under electronic monitoring in February pending an appeal. The DOJ, Storm, and his attorneys did not immediately respond to requests for comment as of press time.