Tornado Cash developer demands charges be dropped following court ruling against OFAC

The developer of the cryptocurrency service Tornado Cash, Roman Storm, has filed a motion in Manhattan District Court to have criminal charges against him dismissed. This step became possible after the Fifth Circuit Court of Appeals ruled that sanctions against Tornado Cash smart contracts were unlawful. In this context, Storm argues that the charges against him, including conspiracy to violate the International Emergency Economic Powers Act (IEEPA), should be dismissed.

In December 2023, the Fifth Circuit Court of Appeals determined that OFAC overstepped its authority by sanctioning Tornado Cash smart contracts, as they do not constitute «property» of any individual or legal entity. This ruling serves as the basis for Storm’s motion, claiming that accusations of conspiracy and sanctions violations must be dismissed since smart contracts cannot be blocked under current laws.

Charges against Roman Storm

Storm and his co-founder Roman Semenov have been accused of facilitating the laundering of over $1 billion through the Tornado Cash platform, including for the Lazarus hacker group linked to North Korea. However, Storm maintains that Tornado Cash’s operations do not meet the criteria for «illegal money transmission», as the protocol has remained unchanged since May 2020. Thus, he argues, it was impossible to form an agreement to launder money, as alleged in the indictment.

The legal status of smart contracts

Storm emphasizes that Tornado Cash smart contracts are immutable and cannot be deleted, meaning that the creators have no control over their use, including transactions involving sanctioned groups. The Appeals Court noted that sanctions against such contracts are legally unfounded, as their creators cannot influence their operation, just as one cannot stop the sunrise.

Impact of the decision on future cases

The Appeals Court’s decision could significantly impact not only Storm’s case but also the broader practice of imposing sanctions on crypto platforms. Declaring sanctions against Tornado Cash unlawful sets a precedent for other services utilizing decentralized smart contracts. This, in turn, may reshape approaches to regulating cryptocurrency platforms and blockchain technologies.