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The U.S. alleged in mid-2023 that Lazarus used Tornado Cash to launder over $1 billion in "criminal proceeds." Bybit/flickr.com

KEY POINTS

  • The DOJ said in August that Storm and another co-founder "knew that they were helping hackers and fraudsters"
  • Storm's lawyers argued that it wasn't a crime to develop a cryptocurrency tool as it was his job as a developer
  • They said the indictment failed to provide evidence Storm "entered into a conspiratorial agreement" to launder money

Tornado Cash developer Roman Storm has filed to dismiss a criminal indictment accusing him of conspiring to commit money laundering and violate sanctions through his work with the fully decentralized cryptocurrency protocol.

Storm was arrested in August last year after he was indicted by the U.S. Department of Justice (DOJ) along with Tornado Cash co-founder Roman Semenov with sanctions violations and federal money laundering. The DOJ alleged that Storm and Semenov knew the tool had laundered over $1 billion in "criminal proceeds" for Lazarus, a notorious North Korean hacking group. Semenov remains at large.

"While publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes," said U.S. Attorney Damian Williams.

Storm's lawyers argued in a filing Friday that the U.S. government "wrongfully concluded that this conduct makes him guilty of multiple criminal conspiracy charges."

They said it wasn't a crime for Storms, as well as the members of his U.S-based company, to develop software solutions to provide financial privacy to legitimate cryptocurrency users.

"The Indictment is fatally flawed and should be dismissed," they said, adding that the indictment "fails to allege facts that would show that Mr. Storm entered into a conspiratorial agreement with any bad actor to launder money, or that he had the specific intent to commit money laundering (nor could do it)."

Tornado Cash allows users to obfuscate the origin and destination of crypto transactions. Storm's lawyers also said the crypto protocol's controls of smart controls were already relinquished in 2020, months before the alleged criminal conduct took place.

The tool doesn't fit the definition of a "financial institution," Storm's legal counsel argued further. Users retain control of their funds and the protocol "did not charge any fee but was a free and open-source software tool," they said.

Storm's arrest raised questions in the crypto community. A funding campaign has been set up on crypto and web3 funding platform Juicebox.money to help with Storm's legal defense. "Open source is not a crime," the fundraiser states.

Storm, who is out on bail, is faced with a maximum sentence of 25 years in prison if convicted with one count of conspiracy to violate the International Economic Emergency Powers Act and a charge of conspiracy to operate an unlicensed money transmitting business.

Some users and crypto figures on X (formerly Twitter) have weighed in on Storm's move to dismiss the indictment. One user said Storm's legal team makes "a valid point" regarding the protocol being "immutable" and publicly available before Lazarus' alleged involvement with the crypto tool.

Jerlis Michael, founder of Bitcoin mining pool emcd.io, said the motion was a "strong move" and it pushes back on "governments encroaching on crypto's liberating ethos." Another user said the move adds an "intriguing twist" to the case.

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