Tornado Cash: Storm Files For Reconsideration Of Motion To Dismiss

• Roman Storm has filed for a reconsideration of the judges decision to deny the dismissal of criminal charges against the Tornado Cash developer
• The motion is based on the Fifth Circuit's decision to reverse sanctions on Tornado Cash, which found that the developers had no control over the smart contracts

In the criminal trial against Tornado Cash developer Roman Storm, the defense has filed a motion to reconsider the court's decision to deny the dismissal of criminal charges against the developer in the Southern District of New York (SDNY).

In November, the Fifth Circuit ruled that the Office of Foreign Asset Control (OFAC) overstepped its authority by invoking sanctions on the software, finding that Tornado Cash software is nothing more than lines of code that cannot be owned and does not constitute property under the International Emergency Economic Powers Act (IEEPA), which governs sanctions.

Because of the immutable nature of Tornado Cash smart contracts, neither the developers nor the Treasury had the ability to stop illicit actors from utilizing the service the Fifth Circuit found, describing Tornado Cash as a tool – not a service.

The Fifth Circuit's ruling now leaves the criminal prosecution against Storm on shaky ground argues Storm's defense, as much of the criminal charges against the developer are contingent on proving that Storm operated a service while having sufficient control over the software's operations.

The criminal charges against Storm for alleged IEEPA violations could not stand, as "these alleged transactions were not services, not owned or controlled by Tornado Cash, and could not have resulted from any deliberate choice by Mr. Storm because they were outside of his control", argues the defense.

"Mr. Storm could no more choose to stop them than he could choose to stop the sun from rising," the motion states.

While the Fifth Circuit's ruling only concerned itself with the sanctions placed on Tornado Cash, Storm's defense argues that much of the argumentation made by the judges also applies to the charges against Storm on conspiracy to money laundering and unlicensed money transmission charges.

According to the motion, "criminal liability [...] requires that Mr. Storm conspired “knowingly and willfully” [...]. But “willfulness” requires “deliberate” conduct, i.e., an act of “free will or choice.”

The Fifth Circuit has made clear that "Mr. Storm could not have acted deliberately or with free will or choice with respect to the alleged money laundering because he was powerless to stop it," the motion states.

The motion states that "the government cannot prove that Mr. Storm or one of his alleged co-conspirators (the Tornado Cash developers) had control over the cryptocurrency (Ether) that allegedly constituted the proceeds of the specified unlawful activity. This is because they relinquished “their control over the pool smart contracts” in 2020 and, thereafter, could not control those smart contracts “or the Ether deposited in the pools.”"

The Fifth Circuit "confirms that the government will never be able to prove that Mr. Storm (or a co-conspirator) had control over the proceeds of the specified unlawful activity," and "the government will never be able to prove that Mr. Storm (or a co-conspirator) “conduct[ed] or attempt[ed] to conduct a financial transaction with those proceeds” because it will never be able to prove they had control over the proceeds," the defense argues.

This too voids the charges on unlicensed money transmission, the defense argues, stating that "Tornado Cash cannot be a money transmitting business because neither it nor its creators had control over the funds."

"If Tornado Cash cannot even be subject to civil sanctions due to lack of control, its creators cannot be criminally liable for the same reason," the motion states, highlighting false equivalents made by the prosecution, which compare Tornado Cash to the custodial services Helix and Bitcoin Fog.

"If Tornado Cash is not property and cannot be owned, then it cannot be a “business” at all, let alone a “money transmitting business",” the motion states.

The defense additionally points out that the prosecution has misinterpreted the Tornado Cash fee system, building arguing that Tornado Cash should be considered a money service business as relayers charged a fee for operations.

As the motion states, "the mere fact that relayers charged fees does not mean that Tornado Cash or Mr. Storm profited," again referencing the Fifth Circuit's ruling, which found that the record does not suggest that Tornado Cash "receives fees from transactions through either mutable or immutable contracts. And none of the immutable smart contracts entitle the smart-contract creators to a benefit."

"The fact that some optional third-party relayers may have received fees does not mean that Tornado Cash did," the motion states.

"Cases involving new technology often tempt the Executive Branch to seek expansion of existing laws to cover previously unimaginable factual situations" the defense states, pointing to the Fifth Circuit's opinion that laws should be made by Congress and Congress alone.

The defense describes all counts of Storm's indictment as "fatally and legally flawed," requesting the dismissal of all charges.

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