A federal judge has ruled that testimony regarding potential modifications to the Tornado Cash platform will be permitted in the criminal trial of Roman Storm, a co-founder and developer of the cryptocurrency mixing service. Judge Katherine Failla denied a defense motion to exclude testimony from a government witness concerning changes Storm could have implemented to deter criminals from using the platform.
Philip Werlau, an investigator at AnChain.AI, a fraud investigation and Anti-Money Laundering compliance company, will be allowed to testify that Storm allegedly possessed the means to prevent Tornado Cash from being used to launder illicit funds through smart contract features, but chose not to. Judge Failla stated that this testimony is admissible, clarifying that Werlau can testify about implementing a feature like a "user registry smart contract" as long as it is technologically feasible and a software developer like Storm would likely have known about it.
Storm is facing charges of money laundering conspiracy, operating an unlicensed money transmitter, and conspiracy to violate U.S. sanctions based on his involvement with Tornado Cash. Prosecutors expect to conclude their case by the end of the week, after which Storm's defense team will present their case. The trial has included testimony from various witnesses, including hackers who allegedly used Tornado Cash to launder funds, an FBI forensic accountant, and a special agent investigating the case.
The defense is considering a potential mistrial, questioning the government's key witness and whether the crypto mixer was even used in a fraud case presented to the jury. Storm's lawyer, David Patton, challenged claims made by Hanfeng Ling, who stated she lost crypto in a "pig butchering" scam in 2021 and believed the funds went through Tornado Cash. The defense argues there is no blockchain evidence linking Ling's stolen funds to Tornado Cash. Ethereum security expert Taylor Monahan echoed these concerns, stating that scammers do not use Tornado Cash and questioning the government's investigative trail.
Tornado Cash is a decentralized, non-custodial privacy solution for Ethereum and ERC20 tokens. It uses zkSNARKs to break the on-chain link between the recipient and destination addresses, enhancing transaction privacy. Users deposit ETH into a smart contract, which can then be withdrawn by a different address, making it difficult to link the withdrawal to the deposit. To deposit, a user generates a secret and sends its hash (a commitment) along with the deposit amount to the Tornado smart contract.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) initially sanctioned Tornado Cash in 2022, but later removed the sanctions in March after a federal judge deemed them illegal. Judge Failla has ruled that the dropped sanctions against Tornado Cash cannot be brought up at trial. Referencing crypto extortion incidents will help Storm's lawyers convince the jury that he did not intend to break the law in building Tornado Cash, despite the protocol's use by cybercriminals in the laundering of billions of dollars worth of stolen crypto.
Roman Storm faces up to 45 years in prison if convicted on all charges.
