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The Department of Justice will continue its case against Tornado Cash’s Roman Storm.
Previously, the DoJ said it was going to reconsider, after an internal memo 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.
Storm now faces a trial, and the remaining charges are focused on money laundering.
ICYMI: Storm is one of the founders of Tornado Cash, which has had a bumpy road with the US government (though it recently received a court win when a judge ruled it can’t be sanctioned again by the government). The DOJ initially charged Storm 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.
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.
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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?
Potentially.
Variant Fund’s Jake Chervinsky said in a post on X that the case “should end, period.”
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Back in April, Paradigm chief legal officer Katie Biber wrote, “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 & 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.”
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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.
So now Storm heads to trial, and this could be a very important one to keep an eye on for the space.
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