TLDR
- Roman Storm’s defense claims prosecutors withheld exculpatory FinCEN communications
- The hidden evidence reportedly shows non-custodial crypto mixers don’t qualify as “money transmitting businesses”
- Storm’s attorneys cited the same FinCEN documents used in the Samourai Wallet developers’ case
- A judge recently ruled that OFAC cannot reimpose sanctions on Tornado Cash
- Storm’s trial is scheduled for July 14, despite one charge being dropped
Tornado Cash developer Roman Storm’s legal team has filed a motion asking the court to reconsider dismissing his case, claiming prosecutors concealed crucial evidence. The dispute centers on communications with the Financial Crimes Enforcement Network (FinCEN) that reportedly indicate non-custodial crypto mixers don’t fall under the legal definition of a “money transmitting business.”
Storm’s attorneys sent a letter to Judge Katherine Polk Failla on May 16, highlighting that prosecutors had known since at least 2023 that crypto mixers like Tornado Cash might not qualify as money transmitting businesses. This information could potentially undermine the government’s case.
The defense argues that despite having this knowledge, prosecutors proceeded with cases against both the Samourai Wallet developers and Tornado Cash. This suggests a pattern of withholding important information from the court.
U.S. prosecutors have denied hiding evidence. They claim they submitted the FinCEN communications within the required timeframe during legal discovery.
Storm’s legal team is using the same documents and argument previously presented by Samourai Wallet developers’ attorneys in a May 5 legal letter. Both cases involve cryptocurrency mixers with similar characteristics under the law.
The FinCEN Connection
The core of Storm’s defense revolves around an August 2023 call between prosecutors in the Southern District of New York and senior FinCEN officials. This call was recently revealed in the Samourai Wallet case.
During this communication, FinCEN reportedly stated that because Samourai Wallet never took custody of user funds, it likely did not qualify as a money services business. This designation carries heavy regulatory requirements.
Tornado Cash operates in a similar way as a non-custodial crypto mixing protocol. Users maintain control of their assets throughout the process, which the defense argues is a key factor in determining whether such services meet the legal definition of a money services business.
Storm’s attorneys claim this withheld FinCEN communication supports their argument that Tornado Cash is not a money transmitting business under federal law. They wrote that the government “at a minimum, misled this Court under relevant FinCEN guidance.”
The defense further argues that prosecutors’ earlier statements led the court to deny both a motion to dismiss and a request for FinCEN-related discovery. This potentially prevented Storm from accessing evidence crucial to his defense.
Case Development
Despite a recent ruling by Federal Judge Robert Pitman denying the Office of Foreign Assets Control (OFAC) the ability to reimpose sanctions on Tornado Cash, federal prosecutors are moving forward with the case against Storm.
Prosecutors have recently dropped one of two charges related to money transmitting business rules. This followed new Department of Justice guidance discouraging enforcement against crypto mixers.
However, Storm’s defense maintains that the FinCEN communication remains relevant to the remaining counts, which include conspiracy to launder money and violate sanctions.
Storm’s legal team is now asking the court to compel the government to disclose all communications with FinCEN and turn over related materials from the Samourai Wallet case.
The trial is currently scheduled for July 14, though this new filing may impact the timeline or outcome of the case.
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