Roman Storm Trial: Is Coding A Crime? The Tornado Cash Court Battle Intensifies

NEW YORK — The government officially rested its case against Tornado Cash developer Roman Storm on Thursday, bringing eight days of witness testimony to a close.

Storm’s defense introduced its first witness, Ethereum core developer Preston Van Loon, on Thursday afternoon. Van Loon told the jury that he was a user of Tornado Cash, describing it as a privacy tool for Ethereum that allowed people to separate their identities from their money. Van Loon explained that he’d used the protocol for “operational security and personal safety” to protect himself from hackers and other unknown adversaries. Van Loon — who sued the U.S. Treasury Department for sanctioning Tornado Cash and won, leading to the sanctions being reversed — did not testify about his related lawsuit, which U.S. District Judge Katherine Polk Failla banned from being discussed at trial.

Van Loon’s testimony was the first taste of Storm’s defense case, which will argue that Tornado Cash was first and foremost a privacy tool that met a legitimate need in the Ethereum community — and that also happened to be exploited by bad actors. In that way, the defense has argued, Tornado Cash is similar to an encrypted messaging app or a virtual private network (VPN) or even a hammer — which Storm’s lawyer Keri Axel, a partner at Waymaker LLP pointed out in her opening statements, could both be used for legitimate purposes as well as breaking into a home.

The defense’s witnesses, whose testimony is expected to stretch over three trial days, will attempt to undo the portrait of Storm painted by the prosecution over the course of their case.

The prosecution’s case is, essentially, this: Roman Storm, along with his colleagues and alleged co-conspirators, Roman Semenov and Alexey Pertsev, owned and controlled Tornado Cash. They profited handsomely from it through their sale of TORN tokens. They knew that criminals, including North Korean hackers, were sometimes using the protocol to launder funds. They made frequent changes to the front end, or user interface of Tornado Cash, and were also thus able to change the nature of the protocol itself to make it less attractive to criminals, but didn’t. And when victims of hacks and scams reached out to Tornado Cash asking for help, Storm told them he couldn’t do anything for them, which the government claimed Thursday was a lie.

This, the government has argued, constitutes a trio of conspiracies: conspiracy to commit money laundering, conspiracy to commit sanctions evasion, and conspiracy to violate international sanctions — charges for which Storm, if convicted, faces up to 45 years in prison.

The defense, meanwhile, has maintained that Storm didn’t participate in any conspiracies because he didn’t know the criminals using his software, didn’t give them the green-light to use it or otherwise profit from their criminal acts. At most, his lawyers told the judge on Thursday, he was negligent, but not criminally responsible for the behavior of Tornado Cash’s worst users.

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Expert (?) witness

Through the testimony of several “victim” witnesses as well as hack perpetrators, the prosecution told the jury how criminal proceeds flowed through Tornado Cash and then disappeared.

But one witness — a victim of a wrong-number WhatsApp scam named Hanfeng Lin, who lost $250,000 to a pig butchering operation – testified earlier in Storm’s trial that a crypto tracing company called Payback traced a portion of her money to Tornado Cash. Over the weekend, however, blockchain sleuth Taylor Monahan (aka @tayvano_x) took to X to explain that Payback, and thus the government, had gotten the tracing wrong. Lin’s money, she said, never went to Tornado Cash — a claim that other well-respected blockchain tracers, including pseudonymous blockchain sleuth ZachXBT, also verified.

The alleged tracing error led the defense to raise the possibility of a mistrial, or at least the striking of Lin’s testimony. However, Failla ruled that another of the prosecution’s witnesses — Internal Revenue Service (IRS) agent Stephan George — would be allowed to verify that Lin’s funds indeed flowed through Tornado Cash, overruling the defense’s objection to George’s introduction as an expert witness.

George, a first-time expert witness, testified that he used an accounting principle called “LIFO” (last in, first out) to trace Lin’s funds. He admitted, upon cross-examination, that the method of tracing does not establish the ownership or attribution of the wallets or funds and does not prove that Lin’s scammers moved her money through Tornado Cash.

During his cross-examination by Axel, George also admitted that he was unsure whether TORN tokens were “a totally different token than ETH,” saying, “It’s not a factor that I have to regularly navigate in my work.” When asked if he knew what Crypto.com (the exchange from which the victim’s funds originated) was, the expert replied: “I have not looked into Crypto.com and what it could be.”

Next steps

Through their own witnesses, the defense will attempt to roll back some of the characterizations and allegations made by the prosecution. On Friday, the defense will call an expert witness as well as Columbia Business School professor Omid Malekan, who will testify about his use of Tornado Cash.

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