Tornado Cash ruling lays dangerous precedent: crypto lawyers

As a seasoned crypto investor with a keen interest in the intersection of technology and law, I find myself deeply troubled by Judge Failla’s ruling against Tornado Cash and Roman Storm. Having witnessed the rapid evolution of the digital asset space over the past decade, I have come to appreciate its potential for fostering innovation, financial inclusion, and privacy.


Judge Katherine Polk Failla decided that a trial should proceed against Tornado Cash and Roman Storm, which has sparked controversy within the cryptocurrency community.

Judge Failla denied the defendants’ motion to dismiss, asserting that the possible uses of code were not protected as speech under the First Amendment. Arguments that the crypto mixer operated differently from money-transmitting businesses were also overruled in the Southern District of New York.

As a cryptocurrency analyst, I found myself deeply troubled by Judge Failla’s recent ruling, sharing in the widespread outrage within our community. The concerns echoed across social media are palpable, as users fear that this court decision may pose a threat to the very foundation of open-source development and the freedom of developers in our field.

In a post-Sept. 26 decision, Tornado Cash and its co-founder Roman Storm have found themselves at the center of an American fight for free expression, as suggested by crypto attorney Jake Chervinsky from Variant CLO. He underlined that industries relying on code, such as artificial intelligence, could potentially face similar legal challenges due to the implications of this case’s precedent.

This is a slippery slope, and we’re sliding down fast. Pay attention.

Jake Chervinsky, Variant CLO

It’s surprising to me that most non-crypto civil rights organizations haven’t taken part in this fight.

— Jake Chervinsky (@jchervinsky) September 27, 2024

Chervinsky’s remarks were shared despite the district judge’s rejection of claims of government-sponsored censorship. Judge Failla was heard saying during the telephone hearing that the U.S. crackdown on sanction evasion and money laundering was unrelated to free speech.

In August 2023, charges of conspiracy and unlawful money transmission were filed against Tornado Cash and its co-founder Roman Storm. Federal prosecutors allege that Storm and other founding members intentionally designed the cryptocurrency tumbler for criminal purposes. The authorities claim that Tornado Cash and Storm aided in the transfer of more than $1 billion in allegedly illegal funds.

A device constructed using Ethereum‘s (ETH) blockchain technology enables users to conceal their financial transactions. Regrettably, this anonymizing tool has been exploited by criminal groups such as the North Korean hacking collective Lazarus, who have laundered vast sums of stolen cryptocurrency through it.

In simpler terms, the storm and the cryptocurrency community believe it’s not their responsibility if the functionality of the code they build has issues, but Judge Failla and the court held a different opinion on this matter.

The trial commences on December 2 and may last approximately two weeks to reach its end. Separately, Tornado Cash developer Alexey Pertsev has been convicted in a Dutch court regarding his work on the cryptocurrency mixer. Pertsev contested the verdict amid cries from the “code isn’t criminal” community.

Read More

Sorry. No data so far.

2024-09-27 20:08