The United States’ arguments to forge ahead on its case against crypto mixer Tornado Cash and developer Roman Storm show a “disdain for privacy” and include a few “egregious statements,” says DeFi Education Fund legal chief Amanda Tuminelli.
The Department of Justice on April 26 opposed Storm’s motion to dismiss conspiracy and money laundering charges which Tuminelli said in April 27 X posts were “filled with technical inaccuracies, obvious disdain for privacy and emerging technology, and misapplication of the law.”
Tuminelli highlighted on X one section where the DOJ said Storm argued that “misconduct through computer software is absolutely protected” and that crypto was “inherently beyond the reach of law enforcement.”
“This is simply not what Storm argued in his motion,” Tuminelli wrote. “It is difficult to imagine how this is not intentionally misleading.”
Tuminelli also slammed prosecutors for not understanding “how immutable smart contract protocols work” as the filing alleges Storm and co-founder Roman Semenov “could have done something about” the alleged unlawful activity on Tornado Cash “but they chose not to.”
The DOJ also “completely ignores” the arguments in the DeFi Education Fund’s amicus brief supporting the dismissal of Storm’s charges — which Tuminelli took “as a compliment.”
In it, the advocacy group argued the International Emergency Economic Powers Act (IEEPA) — giving the president power to regulate from “unusual and extraordinary” threats — has “never been used and should not be used to penalize a software developer that never directly engaged with or solicited conduct with a sanctioned entity.”
"Seminal crypto court case”
Meanwhile, observers say one particular section of the prosecutors’ 111-page response could have huge implications for crypto and internet freedom.
The DOJ argued the money transmitting definition under U.S. law “does not require the money transmitter to have ‘control’ of the funds being transferred” and extends to “transferring funds on behalf of the public by any and all means.”
Pseudo-anonymous industry commentator L0la L33tz said in an April 27 X post that the DOJ’s broad argument “could set [dangerous] precedents for the freedom of the internet.”
“Any provider broadcasting financial transactions” including internet service providers “could be at risk of being forced into KYC,” they claimed. “Grandma sent $50 in the mail? Clearly the postman is running a money service business.”
Another observer, financial writer John Paul Koning wrote on X that the case against Storm “may end up being the seminal crypto court case” and is “really about who, if anyone, is liable for smart contracts and the interfaces that access smart contracts, and to what degree.”
It comes as crypto-focused lawyer Gabriel Shapiro wrote on X that he was “not (yet) worried” that the DOJ’s arguments make decentralized application operators into money transmitters.
He believed the case would come down to the relayers and the crypto mixer’s Tornado Cash (TORN) token.
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“Relayers did Ethereum txs for users (including paying gas). TORN provided an economic interest in the relaying enterprise,” Shapiro explained.
In comparison, on most DApps the user transacts on Ethereum — such as by paying their own gas or by a node “owned by wallet operator, not the DeFi web app operator,” he added.
“[Relayers] literally paid for gas for users,” Shapiro wrote. “Does it definitely constitute ‘money transmission’ under law? We’ll find out, but at minimum it’s closer to the line.”
Storm’s trial is currently slated for September. Semenov is still at large.
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