Ben Strack

The US government expects to rest its case against Tornado Cash co-founder Roman Storm on Thursday following yesterday’s anticipated testimony from an expert witness.



The defense is set to counter the prosecution’s efforts to show Storm could have better guarded against “bad actors” using Tornado Cash — the crypto mixer used for transaction privacy around which this case centers.



IRS Criminal Investigation special agent Stephan George took the stand to share findings that appeared to link a portion of the funds stolen from Hanfeng Lin to Tornado Cash.&nbsp;



Lin testified last week that a fraud recovery service told her to contact Tornado Cash about retrieving her funds. The defense was <a href="https://www.therage.co/tornado-cash-mistrial-hangfeng-lin/">reportedly</a> considering a mistrial motion after a subsequent witness, FBI Special Agent Joel DeCapua, didn’t link Lin’s funds to Tornado Cash — putting the relevance of Lin’s testimony in question.



But George said Wednesday he used public blockchain data — along with Chainalysis Reactor and TRM Labs — to find that a portion of Lin’s stolen funds that left Crypto.com ultimately went to Tornado Cash in November of 2021. 



He used an accounting method known as Last In, First Out (LIFO) — which assumes the disposal of crypto acquired most recently. When defense attorney Keri Axel challenged LIFO during cross-examination, George defended the method as a generally accepted accounting principle that the IRS “respects.”



Axel’s cross-examination of George was set to continue Thursday morning.&nbsp;&nbsp;



While the possibility of a mistrial was briefly mentioned in court Tuesday, the defense did not immediately comment about whether that’s still being considered.&nbsp;



&#8220;It&#8217;s usually not the situation that a trial is declared a mistrial merely because a witness&#8217;s testimony is not entirely germane,” Patrick Gruhn, a former partner at Crypto Lawyers LLC and FTX’s ex-head of Europe, told Blockworks. “Courts generally expect a lot more — egregious misconduct or prejudicial facts against the jury — before they suspend a trial.”



Though George linking Lin’s funds to Tornado Cash was an attempt by prosecutors to clear up a point of contention that arose, the charges against Storm go well beyond that.&nbsp;



At the heart of this case is whether Storm essentially helped criminals — such as North Korean state-sponsored hackers, The Lazarus Group — hide stolen funds, as the government alleges. He is charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business.



Key questions of the case, as shared in opening statements last week, include whether Tornado Cash was immutable and if the developer is responsible for how software is used.



Defense attorney Keri Axel said in her opening statement: “It’s not a crime to make a useful thing that is misused.”



Read more: <a href="https://blockworks.co/news/roman-storm-trial-opening-statements">‘He lied’: US government makes opening plea to jury in Roman Storm trial</a>



After the jury left the courtroom on Wednesday afternoon, the prosecution told Judge Katherine Polk Failla that it had two witnesses remaining and could wrap up by Thursday morning.&nbsp;



Though the defense had not finalized its slate of witnesses before the court let out on Wednesday, Storm’s attorneys said they could rest their case as soon as Monday. Storm has not yet decided whether he will take the stand, they added.



“I assume you don’t have a hacker testifying,” Failla quipped. “That would be interesting.”&nbsp;



<h2 class="wp-block-heading">Hacker takes the stand</h2>



The prosecution did put a hacker on the stand on Tuesday. That was Shakeeb Ahmed, who is currently serving a three-year sentence after <a href="https://www.justice.gov/usao-sdny/pr/former-security-engineer-sentenced-three-years-prison-hacking-two-decentralized">pleading</a> guilty to computer fraud last year. Ahmed, a former technical lead in Amazon’s bug-bounty program, detailed how he stole $12 million worth of crypto from exchanges Crema and Nirvana in 2022.



He put his own funds into a Tornado Cash pool to “anonymize” them before using a third party — known as a relayer — to withdraw them. He then went on to hack the Crema exchange. He did not use Tornado Cash at any point leading up to, or after, he hacked the Nirvana exchange.



The defense, during cross-examination, made clear to the jury that Ahmed never put stolen funds into Tornado Cash.&nbsp;



“You didn’t use Tornado Cash for the [hack] proceeds?” defense attorney David Patton asked.&nbsp;



“Correct,” Ahmed said.



Patton also asked whether Ahmed ever communicated with Storm and the other Tornado Cash founders, or conspired with them to commit crimes.



“I did not,” Ahmed noted.



<h2 class="wp-block-heading">Questioning Tornado Cash’s design choice</h2>



The prosecution sought to establish, through another witness, that Storm — along with Tornado Cash co-founders Roman Semenov and Alexey Pertsev — could have made changes to the protocol to guard against bad actors using it.&nbsp;



The Office of Foreign Assets Control (OFAC) deemed the Lazarus Group responsible for the $625 million Ronin Bridge hack in March 2022 and sanctioned the entity. Tornado Cash <a href="https://x.com/TornadoCash/status/1514904975037669386">said</a> the following month that it was using a Chainalysis oracle contract “to block OFAC-sanctioned addresses from accessing the dapp.”



Philip Werlau, an investigator at AnChain.AI, testified that — while that blocked sanctioned entities from using Tornado Cash’s web application — founders did not implement this control for deposits made via its Command Line Interface (CLI).&nbsp;



“If there are two doors to a building and you only close one, you’re not preventing access,” Werlau said.



Werlau also explained how Tornado Cash could have maintained an offchain registry with users’ personal info collected through a username-password system.



Anticipating this testimony, defense attorneys noted to the judge earlier that day that while Tornado Cash could have been designed differently, that doesn’t mean what Storm built was illegal.



This sentiment came out during the cross-examination, when defense attorney Brian Klein raised his voice — asking Werlau if one reason to make pools immutable would be to make them less subject to hacks. That could reduce the ways a pool could be attacked, Werlau acknowledged.&nbsp;



Klein then asked Werlau if he provides personal info when he uses the Ethereum blockchain.



As Werlau paused to think, Klein rephrased, almost shouting: “There’s nothing like the registry you proposed, is there?”&nbsp;



“That is correct.”



Werlau, seemingly uncomfortable with the confrontation, looked up at the clock. A break for lunch was not far off.&nbsp;



<h2 class="wp-block-heading">The scene and the stakes</h2>



This writer sat 20 or so feet from Storm over the last two days, even passing him during breaks en route to the bathroom and elsewhere. The Tornado Cash founder appears calm, but walks with pace.



Sitting next to Axel on the courtroom’s left side, Storm often gazes toward the judge, stand and jury, stone-faced, blinking infrequently behind his glasses. Occasionally, he will scribble something on a Post-It and hand it to a member of his defense team. This writer did not once see Storm roll his eyes or shake his head.&nbsp;



Trial attendance ranged from roughly a dozen to two dozen people on Tuesday and Wednesday — meaning there are plenty of empty seats.&nbsp;



While not as high-profile a case as the Sam Bankman-Fried trial, Blockchain Association legal head Marisa Coppel noted its outcome will shape how developers, regulators and policymakers navigate the future of crypto innovation.



“A conviction could set a dangerous precedent by criminalizing the act of writing and publishing open-source code, amplifying fears among US developers and pushing innovation offshore,” she told Blockworks. “An acquittal, by contrast, may reaffirm that software creation alone isn’t a crime and could help restore confidence in building decentralized tools.”



Keep an eye on Blockworks for more <a href="https://blockworks.co/tag/roman-storm">Roman Storm trial updates</a>. 



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Hacker, IRS agent take Storm trial stand as government winds down case

Casey Wagner

Prosecutors and the defense team painted vastly different pictures of Tornado Cash developer Roman Storm’s motives and role during the second day of his criminal trial in Manhattan.&nbsp;



The government’s lead prosecutor Kevin Mosley said Storm helped criminals hide their dirty money. The crimes were intentional and Storm acted out of greed, he said during the opening remarks.



Plus, Mosley added, Storm lied to victims of hacks and scams, telling them there was nothing he could do to help them locate their stolen money.&nbsp;



Defense attorney Keri Axel, however, had a different narrative for the jury. Yes, there may have been some bad actors who used Tornado Cash for illicit purposes, but that’s not Storm’s fault.&nbsp;



“It’s not a crime to make a useful thing that is misused,” she said in her opening statement.&nbsp;



Tornado Cash was decentralized, Axel said, so Storm couldn’t have interfered if he wanted to, and besides, isn’t a tool that provides financial privacy a public service?&nbsp;



Read more: <a href="https://blockworks.co/news/tornado-cash-motion-to-dismiss-denied">Judge denies motion to dismiss case against Tornado Cash founder</a>



The opening statements underpin the underlying questions this case seeks to answer: Was Tornado Cash immutable, and is the developer responsible for how a software was used?&nbsp;



The government also focused much of its opening statement on who used Tornado Cash, specifically North Korean state-sponsored hackers, <a href="https://blockworks.co/news/bybit-hack-paradigm-samczsun-north-korea">the Lazarus Group</a>. The Treasury Department’s Office of Foreign Assets Control (OFAC) alleges this group used Tornado Cash to launder roughly $455 million of the $620 Axie Infinity/Ronin Bridge hack in March 2022.&nbsp;



In their opportunity to address the jury, the defense leaned heavily on Ethereum developer Vitalik Buterin’s relationship with Storm. Tornado Cash was designed with the intention of helping Ethereum users solve a “huge problem” associated with onchain transactions: privacy.&nbsp;



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-tornado-cash">Judge rules Tornado Cash is not protected under the First Amendment</a>



Storm, who faces three federal charges, including conspiracy to commit money laundering, appeared calm during opening statements. He sat facing the jury with a straight face.&nbsp;



The jury, which was finalized Tuesday morning, consists of seven women and five men ranging in age from their 20s to 60s. One juror works as an IT manager and another works for Palantir, a software company with anti-terrorism and AI products.&nbsp;



The trial is expected to last 15 days in court, or roughly three weeks, according to attorneys on both sides.



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‘He lied’: US government makes opening plea to jury in Roman Storm trial

Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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The Eleventh Circuit Court of Appeals signed off on a joint motion previously filed by both the Treasury Department and Coin Center to dismiss Coin Center’s appeal challenging the Tornado Cash sanctions.&nbsp;



It’s yet another sign of how far we’ve come, given that the government willingly removed those sanctions back in March. Attorneys for the government argued in the motion to dismiss that their willing decision made the case “moot.”



Now, while the government has clearly made strides in its acceptance of crypto, I should also point out that another case did help push it to make its decision.&nbsp;



Earlier this year, in a Western Texas court, a judge ruled that the “action is unlawful and is therefore set aside” and barred the government from enforcing the sanctions if they chose not to appeal (and that time period to appeal ended on June 28).&nbsp;



“The parties have conferred about the effect of these developments on this appeal. The government’s view is that OFAC’s rescission of the designation moots this appeal. Plaintiffs’ view is that this appeal will become moot after the Texas judgment becomes final and unappealable,” Coin Center and the government wrote in the motion.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This is the official end to our court battle over the statutory authority behind the TC sanctions. The government was not interested in moving forward and defending their dangerously overbroad interpretation of sanctions laws. Thank you again to our co-plaintiffs:…&mdash; Peter Van Valkenburgh (@valkenburgh) <a href="https://twitter.com/valkenburgh/status/1942262643546292443?ref_src=twsrc%5Etfw">July 7, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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All of this is great, right? Years of court battles and money on lawyers have finally ended in outcomes that push crypto forward.&nbsp;



But the big catch is that this decision unfortunately doesn’t stop the trial proceeding against Tornado Cash’s founder, Roman Storm, which is set to start next Monday, July 14.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">To resolve any confusion, my criminal trial, led by the SDNY, is scheduled for July 14, 2025 <a href="https://t.co/C8nIVeyuEe">https://t.co/C8nIVeyuEe</a>&mdash; Roman Storm 🇺🇸 🌪️ (@rstormsf) <a href="https://twitter.com/rstormsf/status/1942327725991379155?ref_src=twsrc%5Etfw">July 7, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Storm and his lawyers will have to prove to a jury that he didn’t knowingly create or operate a money-transmitting business when he and co-founder Roman Semenov wrote the code for Tornado Cash.



“The irrationality and unfairness of these charges cannot be overstated. The Treasury Department has long recognized that developers who publish software are not money transmitters,” Paradigm’s Katie Biber <a href="https://www.paradigm.xyz/2025/06/paradigm-files-amicus-brief-supporting-roman-storm">wrote</a> last month.&nbsp;



The stakes are high, she further argued, because this case could have lasting repercussions for developers in crypto.&nbsp;



So while we’re clearly making strides in the mass acceptance of crypto, it’s clear we still have a ways to go, and next week’s trial sets up a big battle. One that we all have to pay attention to.



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Appeals court grants motion to dismiss in Tornado Cash suit

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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The Department of Justice will continue its case against Tornado Cash’s Roman Storm.&nbsp;



Previously, the DoJ said it was going to reconsider, after an <a href="https://www.justice.gov/dag/media/1395781/dl?inline">internal memo</a> from Deputy Attorney General Todd Blanche said that the department would “stop participating in regulation by prosecution in this space.”



There was a slight change in the case, per the letter, which will drop the charge of Storm allegedly not complying with the money-transmitter business registration rules.&nbsp;



Storm now faces a trial, and the remaining charges are focused on money laundering.&nbsp;



ICYMI: Storm is one of the founders of <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a>, which has had a <a href="https://blockworks.co/news/ny-fed-tornado-cash-report">bumpy road</a> with the US government (though it recently received a <a href="https://www.coindesk.com/policy/2025/04/29/tornado-cash-can-t-be-sanctioned-again-texas-judge-rules">court win</a> when a judge ruled it can’t be sanctioned again by the government). The DOJ initially <a href="https://blockworks.co/news/roman-semenov-tornado-cash-ofac-list">charged Storm</a> back in 2023 alongside his co-founder Roman Semenov. 



In the April memo from Blanche, he outright said that the DOJ will focus its cases on the bad actors who are using the various platforms, rather than the platforms or the developers themselves.&nbsp;



Here’s Blanche’s direct quote: “The Department will pursue the illicit financing of these enterprises by the individuals and enterprises themselves, including when it involves digital assets, but will not pursue actions against the platforms that these enterprises utilize to conduct their illegal activities.”



The DeFi Education Fund noted that the dropped charge is “consistent” with the April memo.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Today, the DOJ filed notice it is dropping the Section 1960(b)(1)(B) charge against <a href="https://twitter.com/rstormsf?ref_src=twsrc%5Etfw">@rstormsf</a> in U.S. v. Roman Storm, but will continue to trial on other charges. While this was consistent with an April 2025 DOJ Memo, calling for the end to “regulation by prosecution” and for the… <a href="https://t.co/STDP2xXzP2">pic.twitter.com/STDP2xXzP2</a>&mdash; DeFi Education Fund (@fund_defi) <a href="https://twitter.com/fund_defi/status/1923100662147035538?ref_src=twsrc%5Etfw">May 15, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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It seems that, even with the changes, this potential trial sets up a tricky situation — with the US just opening up, is there a possible precedent set legally that could impact developers?&nbsp;



Potentially.



Variant Fund’s Jake Chervinsky said in a post on X that the case “should end, period.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">DOJ clearly ordered the end of regulation by criminal enforcement in crypto. But SDNY dropped only one of many inappropriate charges against Roman Storm. Like spitting in DOJ’s face. This is why people call it the Sovereign District of New York. The case should end, period. <a href="https://t.co/JXdJSg7aDf">https://t.co/JXdJSg7aDf</a>&mdash; Jake Chervinsky (@jchervinsky) <a href="https://twitter.com/jchervinsky/status/1923113075139322090?ref_src=twsrc%5Etfw">May 15, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Back in April, Paradigm chief legal officer Katie Biber <a href="https://x.com/katiebiber/status/1914392536795455822">wrote</a>, “If developer liability is unlimited and tied to the conduct of unknown third parties, no developers will want to build in America. It destroys the innovation economy here and ships crypto, AI &amp; all nascent tech offshore.”



DEF, in another post, said that the case moving forward with the current charges means that the prosecutors are arguing that Storm “‘[transferred] funds on behalf of the public,’ pursuant to 1960(b)(2), which means the accused must have custody and control over other people’s funds.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">In short, the DOJ will continue with its illogical and unlawful theory of money transmission. For any Section 1960 charge, the accused must be “transferring funds on behalf of the public,” pursuant to 1960(b)(2), which means the accused must have custody and control over other…&mdash; DeFi Education Fund (@fund_defi) <a href="https://twitter.com/fund_defi/status/1923100664881942651?ref_src=twsrc%5Etfw">May 15, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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“That is plainly not the case with software devs of noncustodial p2p protocols, and under any fair reading of the law, both charges should be dismissed,” DEF continued.&nbsp;



So now Storm heads to trial, and this could be a very important one to keep an eye on for the space.&nbsp;



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