Tornado Cash

Tornado

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,” said DeFi Education Fund legal chief Amanda Tuminelli.
The Department of Justice on April 26 <a href="https://cointelegraph.com/news/doj-challenges-motion-to-dismiss-tornado-cash-co-founder-s-charges">opposed Storm’s motion to dismiss</a> conspiracy and money laundering charges, which Tuminelli said in X <a href="https://twitter.com/amandatums/status/1784293194684911650" target="_blank" rel="noopener nofollow">posts</a>&nbsp;on&nbsp;April 27 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.”
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 Source: <a href="https://twitter.com/amandatums/status/1784293202020749395" target="_blank" rel="noopener nofollow">Amanda Tuminelli</a>
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The DOJ also “completely ignores” the arguments in the DeFi Education Fund’s <a href="https://cointelegraph.com/news/blockchain-association-amicus-brief-tornado-cash">amicus brief</a> 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 “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.”
<h2 id="seminal-crypto-court-case">“Seminal crypto court case”</h2>
Meanwhile, observers say one particular section of the prosecutors’ 111-page response could have huge implications for crypto and internet freedom.
The DOJ argued that the&nbsp;<a href="https://cointelegraph.com/news/fbi-warning-crypto-money-transmitter-appears-aimed-samouri-wallet">money transmitting</a> 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.”
Pseudonymous industry commentator “L0la L33tz” said in an April 27 X <a href="https://twitter.com/L0laL33tz/status/1784318410957976023" target="_blank" rel="noopener nofollow">post</a> 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.”
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 Source: <a href="https://twitter.com/ohaiom/status/1784342375239672077" target="_blank" rel="noopener nofollow">Jason Gottlieb</a>
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Another observer, financial writer John Paul Koning,&nbsp;<a href="https://twitter.com/jp_koning/status/1784191018973134977" target="_blank" rel="noopener nofollow">wrote</a> 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 <a href="https://twitter.com/lex_node/status/1784290848584196373" target="_blank" rel="noopener nofollow">wrote</a> 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.
Related: <a href="https://cointelegraph.com/news/samourai-wallet-mixer-co-founders-arrested-aml-licensing-charges">Samourai Wallet mixer co-founders arrested on AML, licensing charges</a>
“Relayers did Ethereum txs for users (including paying gas). TORN provided an economic interest in the relaying enterprise,” Shapiro explained.
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 <img src="https://s3.cointelegraph.com/uploads/2024-04/5b47163b-c0c3-4a9e-8e6d-b681956a8453.png" alt="" title="">
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 Source: <a href="https://twitter.com/lex_node/status/1784290851083977042" target="_blank" rel="noopener nofollow">Gabriel Shapiro</a>
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In comparison, on most <a href="https://cointelegraph.com/learn/what-are-dapps-everything-there-is-to-know-about-decentralized-applications#:~:text=Decentralized%20applications%2C%20or%20DApps%2C%20are,terms%20of%20a%20feature%20set.">decentralized applications (DApps)</a>,&nbsp;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.
Magazine: <a href="https://cointelegraph.com/magazine/tornado-cash-2-0-the-race-to-build-safe-and-legal-coin-mixers/">Tornado Cash 2.0 — The race to build safe and legal coin mixers</a>

DOJ’s Tornado Cash arguments show ‘obvious disdain for privacy’ — Lawyer

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