DOJ Opposes Tornado Cash Dismissal, Crypto Worries Rise

The US Department of Justice (DOJ) has taken a firm stance against Roman Storm’s motion for dismissal, raising concerns within the crypto market. Storm is one of the developers behind Tornado Cash, a popular crypto-mixing service. The DOJ outlined its reasons for opposing Storm’s motion in a court filing dated April 26. They asserted that he should be held accountable for the alleged crimes associated with Tornado Cash.

The department charged Roman Storm and Roman Semenov with various counts for creating a cryptocurrency mixing service called Tornado Cash. Authorities accuse them of conspiring to launder money, operating an unlicensed money-transmitting business, and violating OFAC-imposed sanctions, among other charges.

The authorities said that because these allegations were so serious, a jury should ascertain what kind of service Tornado Cash provided. It also opposed Storm’s bid to quash the indictment through his account of how the service functioned.

Additionally, they disputed Storm’s claim that Tornado Cash did not act as a money-transmitting business due to lack of fund control. The DOJ does not need to meet controlling funds to regard a business as a money-transmitting business.

According to the DOJ legal team, the definition of ‘money transmitting’ under Section 1960 does not require a money transmitter to have control over the funds it is transferring. It covers “transferring funds on behalf of the public by all means.

Crypto Community Concerns

This DOJ stance has caused worries within the crypto industry. Several community experts warned that the outcome of the Tornado Cash case could have a huge effect on the sector. CEO of Custodia Bank Caitlin Long said that they broadened money transmitter definition is a “shift” against existing FinCEN guidance.

IF YOU’RE NOT WATCHING, you should be.👇Where’s the fair notice of this new position? This is a shift. Correct me if I’m wrong, but this is the first time I’ve seen Warren/Biden take this position. It also contradicts existing FinCEN guidance, no? https://t.co/bSBeE1K0HI

— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) April 27, 2024

Furthermore, Amanda Tuminelli, Chief Legal Officer of Fund DeFi, also criticized the DOJ’s position. The lawyer pointed out technical inaccuracies and misapplications of law in the filing.

“The DOJ’s opposition to Roman Storm’s motions to dismiss and suppress evidence in the Tornado Cash case is filled with technical inaccuracies, obvious disdain for privacy and emerging technology, and misapplication of the law,” Tuminelli stated.

Likewise, Seth, the editor of Freedom. Tech suggested that the government’s long-term goal is to focus on self-custody. He pointed to examples from the DOJ’s opposition that support this intention.

Reading through this, it seems clear to me that the DOJ seeks to widen the net on what can be considered an MSB, allowing them to apply the subsequent regulations (and potential prosecution) to anyone who makes it easier to use cryptocurrency, especially if any level of privacy is involved,” Seth concluded.

This backlash against the DOJ comes as the US government increases its enforcement efforts against crypto. Last week, the co-founders of Samourai Wallet, another crypto mixer, were arrested, further intensifying regulatory scrutiny in the industry.

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