- Co-founder Roman Storm has been charged with money laundering.
- VCs and the DeFi Education Fund sent a letter to crypto czar David Sacks.
- The plea follows the Department of Justice's changed stance on crypto prosecutions.
Prosecutors should drop their “lawless” campaign to imprison Tornado Cash co-founder Roman Storm, crypto heavyweights said on Monday in a letter addressed to David Sacks, the White House crypto and AI czar.
Storm’s upcoming criminal trial in the Southern District of New York has become a cause célèbre within crypto.
Led by the DeFi Education Fund, an influential policy group, the letter was signed by executives at venture capital firms Paradigm, Multicoin Capital, and 6th Man Ventures.
Storm’s protocol, Tornado Cash, cloaks otherwise traceable transactions on the Ethereum blockchain.
Meaningful control
Popular with privacy-conscious crypto users, Tornado Cash has also been used by cybercriminals attempting to launder the proceeds of hacks and scams.
Prosecutors allege Storm laundered $1 billion in criminal proceeds, violated US sanctions, and ran an unlicensed money transmitting business.
Storm and his supporters say he had no meaningful control over the way other people use Tornado Cash and have likened his legal travails to prosecuting gun manufacturers for shootings.
“This is not only absurd in principle, but it sets a precedent that potentially chills all crypto development in the United States,” said his supporters.
Earlier this month, Storm appeared to receive welcome news from an unlikely source: the US Department of Justice.
In a memo published April 8, the department said it no longer intends to pursue crypto mixers — a category that includes Tornado Cash — “for the acts of their end users or unwitting violations of regulations.”
But the memo did not address a key complaint from Storm’s supporters, namely prosecutors’ determination that Tornado Cash was a so-called money transmitting business subject to strict regulatory oversight.
Dirty money
Indeed, the department said it would continue pursuing business owners who know they’re handling dirty money, according to the memo. Controversially, prosecutors have alleged Storm did just that.
Nevertheless, the memo gives prosecutors leeway to drop the charges against Storm, according to the DeFi Education Fund.
That’s because it “expressed principles” that reflect guidance from the Department of the Treasury stating peer-to-peer protocols are not money transmitters, according to Monday’s letter. Prosecutors’ assertion Tornado Cash is a money transmitter ignores that guidance.
“It seems the [Southern District of New York] has not received the message,” the letter states, referring to the April 8 memo.
“This kind of legal environment does not just chill innovation — it freezes it; it empowers politically-motivated enforcement and puts every open-source developer at risk, regardless of industry. No one writing code in good faith should have to fear prosecution for the actions of strangers.”
Storm’s trial is scheduled to begin in Manhattan in July.
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.
