U.S. Prosecutors Dispute Storm Defense in Tornado Cash Case

• Prosecutors say the Supreme Court copyright ruling is irrelevant to Storm’s case.
• Storm is accused of enabling over $1B in illicit crypto transactions via Tornado Cash.
• Prosecutors allege Storm knew of $449M hack funds flowing through the platform.

U.S. prosecutors from the Southern District of New York told Judge Katherine Polk Failla that a Supreme Court ruling cited by Tornado Cash co-founder Roman Storm has no relevance to his criminal case, arguing that both the legal context and the underlying facts are fundamentally different.

Storm’s lawyers had pointed to the court’s decision in a copyright dispute involving internet provider Cox Communications, saying it could help limit liability for platforms used by third parties. But prosecutors said the comparison is misplaced.

For the unversed, Storm is accused of helping enable more than $1 billion in illicit transactions through Tornado Cash, a crypto mixing service designed to obscure transaction trails. A jury last year convicted him on one count related to money transmission but did not reach a verdict on other charges, including money laundering.

‘Far Cry’ From Supreme Court Case

In their filing, prosecutors drew a contrast between the two cases. They said the company in the Supreme Court ruling actively worked to curb illegal activity, including issuing warnings and terminating accounts, with measures that “ended 98% of identified infringement.”

Tornado Cash, by comparison, was “a far cry” from that model, prosecutors said, pointing to what they described as weak safeguards that failed to meaningfully prevent misuse.

‘Window Dressing’ Safeguards

Prosecutors accused Storm of implementing compliance measures that were knowingly ineffective. Some controls were described internally as “easy to bypass” and were introduced mainly to “distract law enforcement,” according to the filing.

They also alleged Storm misled users about his control over the platform. While publicly claiming limited involvement, he and his co-founders made more than 250 changes to Tornado Cash’s infrastructure.

“In short, the defendant’s reaction to criminal use of his company was window dressing at best and outright misdirection at worst,” prosecutors said.

Awareness of Illicit Flows

The government further argued that Storm knowingly allowed the platform to process stolen funds. In one example, about $449 million linked to a major hack was allegedly laundered through Tornado Cash in over 1,700 transactions, with Storm aware of the activity as it unfolded.

At times, prosecutors said, illicit transactions accounted for more than half of the platform’s activity during major incidents.

Prosecutors concluded that even if the Supreme Court ruling had any relevance, it would not support Storm’s defense given the “strikingly different facts,” adding that “the defendant’s conduct simply is not comparable.”

The court has yet to rule on the latest arguments as the case proceeds.

Related: Crypto Scam Complaints Reach 181,565 as U.S. Losses Hit $11.366B