DOJ challenges motion to dismiss Tornado Cash co-founders charges

According to the filing, the DOJ criticized Tornado Cashs co-founders for inadequate changes to exclude sanctioned addresses.

The United States Department of Justice (DOJ) prosecutors opposed a Motion to Dismiss conspiracy and money laundering charges against Tornado Cash co-founder Roman Semenov. They argued that the defenses filing raised disputed facts for jury consideration, which is unsuited for early-stage motions.

In the DOJ‘s response, the prosecutors analyzed why the Tornado Cash co-founder should answer for the alleged crimes levied against him. The DOJ contested the defense’s characterization of Tornado Cash, noting it was introduced in 2019 as a mixer. The service comprises a website, a user interface, a set of smart contracts, and a network of “relayers.”

The DOJ accused Roman Storm and fellow developer Roman Semenov of conspiring to commit money laundering, operating an unlicensed money transmitter, and violating sanctions by creating Tornado Cash, a crypto-mixing service. U.S. authorities claim that entities like North Koreas Lazarus Group used Tornado Cash to launder funds.

Court filing in the U.S. District Court for the Southern District of New York. Source: CourtListener

In September 2023, Storm pleaded not guilty to all charges and was released on a $2 million bond shortly after his arrest. He is primarily restricted from traveling outside some areas of New York, New Jersey, Washington and California.

However, in late March, Storms attorneys sought to dismiss the indictment by arguing that authorities lacked grounds to charge him. Semenov clarified that he contributed to code design but is not accountable for its use.

Semenov‘s legal team’s motion to dismiss emphasized that Tornado Cash does not operate as a custodial mixing service and does not meet the criteria for a “financial institution.” They claimed Storm had no control over the service to prevent entities like Lazarus Group from using it.

Damian Williams-led team of prosecutors argued in the filing that Semenov was accountable for operating the cryptocurrency mixer and accused him of developing systems aiding criminals in anonymity. They criticized Tornado Cashs co-founders for inadequate changes to exclude sanctioned addresses.

This comes as the U.S. government continues its crackdown on crypto-mixing services.

On April 24, the co-founders of Samourai Wallet, a cryptocurrency mixer, Samourai Wallet CEO Keonne Rodriguez and chief technology officer William Hill, were arrested and charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years and conspiracy to operate an unlicensed money transmitting business, which carries a maximum sentence of five years.

Ki Young Ju, CEO of CryptoQuant, stated that crypto mixing services are not inherently criminal in response to the recent arrest of the founders of Samourai Wallet.