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Tornado Cash Developer Raises $440K for Legal Defence Backed by Edward Snowden

Last Updated January 24, 2024 2:27 PM
James Morales
Last Updated January 24, 2024 2:27 PM

Key Takeaways

  • Tornado Cash co-founder Roman Storm was arrested for money laundering and sanctions violations last year.
  • Storm’s appeal for donations to help fund his defense has raised $440,000.
  • Supporters including Edward Snowden view the case as critical for the defense of American privacy rights.

After he was charged with money laundering and sanctions violations by the US Department of Justice (DoJ) last year, Tornado Cash co-founder Roman Storm has appealed for donations to fund his legal fees. 

Since the fundraising initiative launched on Monday, January 22, supporters have already donated nearly half a million dollars, while high-profile privacy advocates like Edward Snowden have rallied to Storm’s defense. 

Authorities Crack Down on Anonymous Crypto Mixers

Tornado Cash is an open-source cryptocurrency mixer that has become the bane of anti-money laundering authorities the world over, due to its ability to obscure the trail of illicit crypto transactions. In the US and elsewhere, law enforcement agencies have spearheaded a campaign to prohibit its use, arguing that its popularity with criminals justifies a blanket ban

In 2022, the Treasury’s Office of Foreign Assets Control (OFAC) issued sweeping sanctions against Tornado Cash, calling the protocol a “significant threat” to national security. Extending the same reasoning to a wider range of platforms and services, in October 2023,  the Financial Crimes Enforcement Network (FinCEN) moved to introduce  a broader set of sanctions covering crypto mixers in general.

Courts Weigh in on Tornado Governance

As well as blocking US citizens from using the crypto mixer, the OFAC sanctions foreshadowed Storm’s later arrest, referring to the open-source Tornado Cash protocol as an “entity,” with potentially identifiable owners.

Taking issue with this characterization, separate lawsuits filed by Coin Center and a Coinbase-backed group of Tornado supporters contested that OFAC had overstepped its authority. The plaintiffs argued that the agency had no power to issue such far-reaching sanctions, which implicate members of the Tornado Cash DAO in crimes committed by actors they never interacted with.

In both cases, however, courts upheld OFAC’s sanctions, ruling that the DAO could be considered a legal entity responsible for operating Tornado Cash. Neither decision bodes well for the Tornado Cash developers currently awaiting trial.

Thanks to the precedent established by the sanctions verdicts, when charges against Storm and co-developer Roman Semenov come to trial, prosecutors will be better equipped to paint them as the operators of a coherent money laundering operation whom the DoJ has accused  of directly facilitating $1 billion in illicit transactions.

As alleged by FBI Director Christopher A. Wray, the 2 men “engaged in a conspiracy to launder money for cybercriminals, including for a North Korean cybercrime organization seeking to evade sanctions.”

Meanwhile, US Attorney Damian Williams accused the pair of “helping hackers and fraudsters conceal the fruits of their crimes.”  

“Privacy is Not a Crime” – Tornado Cash and American Rights

Debates over the use of crypto mixers point to a broader ideological clash over privacy-enhancing technologies more generally. 

The government’s moves to sanction Tornado Cash mirror ongoing efforts to crack down on privacy coins. In both cases, law enforcement objections appeal to the same logic: the illicit use of these platforms by criminals warrants their general prohibition.

After Storm’s arrest last year, free speech advocates and privacy campaigners jumped to his defense, interpreting the DoJ’s indictment as a threat to the Americans’ 1st and 4th Amendment rights.

In a video posted on X, Storm appealed for donations to help fund his legal defense, “not just for my family’s sake, but for the future of software developers and financial privacy.” 

Arguing that “this case will set a major precedent for years to come,” the video was broadcast to a much larger audience after it was shared by Edward Snowden, who added the caption, “privacy is not a crime.”

At the time of writing, the campaign had raised over $440,000 in fiat and crypto donations.

What About Alexey Pertsev?

In parallel with Storm and Semenov’s ongoing legal trouble in the US, a third Tornado Cash developer, Alexey Pertsev, is awaiting trial in the Netherlands. 

Like his co-developers, Pertsev stands accused of violating sanctions and anti-money laundering rules through his role in creating and operating Tornado Cash.  On both sides of the Atlantic, prosecutors have sought to depict the protocol as innately unlawful and paint a picture of its developers as criminal masterminds in cahoots with the world’s most notorious organized crime and terrorist groups.

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