Policy, Roman storm, DOJ, SDNY, News Storm’s lawyers say their client had nothing to do with the criminals using Tornado Cash. Prosecutors say he was capable of stopping them, and chose not to. 

NEW YORK — There is at least one fact that both the defense and the prosecution agree in the ongoing criminal money laundering trial of software developer Roman Storm: the product he helped to create and run — a once-popular crypto privacy tool called Tornado Cash — was exploited by hackers and cyber criminals to launder their dirty money.

What the parties do not agree on, and the fundamental question at the heart of Storm’s trial, is whether Storm was able to prevent this behavior, whether he knew which criminals were using the Tornado Cash protocol and how and, most importantly, whether he should be held criminally liable for creating a tool that bad actors used to cover their tracks.

Storm, 36, has been charged with conspiracy to commit money laundering, conspiracy to violate U.S. sanctions, and conspiracy to operate an unlicensed money transmitting business — charges which, if Storm is convicted, carry a maximum combined sentence of 45 years in prison. His trial kicked off in Manhattan on Monday, and opening arguments took place Tuesday afternoon after lawyers selected a 12-person jury to oversee the three-week trial.

Read more: Jury Seated for Tornado Cash Dev Roman Storm’s Trial

During the government’s opening statements, prosecutor Kevin Mosley told the jury that Roman Storm “knew that his business was laundering dirty money” and that he made millions of dollars doing it. Mosley said the jury would see a photo of Storm wearing a t-shirt with a picture of a washing machine with Tornado Cash’s logo on it — evidence that he allegedly knew exactly what Tornado Cash was being used for.

Storm, Mosley said, turned a blind eye to the hackers using his platform and ignored pleas from scam victims who reached out to him, asking for help recovering their money. Though prosecutors claim Storm either told the victims he couldn’t help them or ignored them entirely, Mosley said Storm maintained full control over the Tornado Cash platform, even tweaking it “to make it even better for criminals to hide their money.”

Some of Tornado Cash’s users included North Korea’s infamous state-sponsored hacking organization, the Lazarus Group, which used Tornado Cash to launder the proceeds of its 2022 hack of Axie Infinity’s Ronin Network. Mosley told the jury that, by allegedly facilitating the Lazarus Group’s money laundering, Storm and his “co-conspirators” — fellow developers Alexey Pertsev and Roman Semenov — violated U.S. sanctions against North Korea. Mosley said Storm knew Tornado Cash was helping North Korea skirt U.S. sanctions because he allegedly texted Semenov and Pertsev, “guys, we’re done for” after news of the Axie Infinity hack broke.

Storm’s lawyers, of course, see the facts of the case very differently. In her opening statements to the jury, Keri Axel, a partner at Waymaker LLP, said that Storm’s text to Pertsev and Semenov after the Axie Infinity hack had nothing to do with sanctions, and everything to do with the impact of the hack on Tornado Cash’s reputation, as well as the price of the TORN token, which suffered in the wake of the hack. The washing machine t-shirt, she said, was a joke “in poor taste.”

Storm, Axel said, didn’t work with hackers or scammers, and didn’t want them using his product.

“These criminals, acting without any assistance from Roman [Storm], misused Tornado Cash,” Axel said. “You will not see any evidence that he communicated with them or assisted them, absolutely none.” The fact that Tornado Cash was continuously exploited by bad actors “ultimately killed his dream” of creating a privacy tool that was widely adopted and respected throughout the crypto community, Axel said.

It is privacy — and the legitimate need and desire for it — that sits at the core of Storm’s defense. His lawyers told the jury that their client, a Kazakhstan-born U.S. citizen who taught himself to code while working odd jobs as a bus boy and a security guard before jumping to the tech industry, was inspired to create a privacy tool after meeting Ethereum co-founder Vitalik Buterin, who she described to the jury as a “crypto rockstar.”

While Axel admitted that Tornado Cash was “misused” by bad actors, she said that they represented a minority of the tool’s users — most of whom she said were normal people using Tornado Cash to preserve their privacy.

“It’s not a crime to make a useful thing that’s misused by bad people,” Axel said, comparing Tornado Cash to a smart phone used to scam people, or a hammer used to break into homes.

She explained to the jury that, because the blockchain is public and easily searchable, any known wallet address can be searched, and its transactions (and the value of its contents) can be viewed by anyone. Axel explained that, in the crypto industry, loss of privacy has led to the recent string of kidnappings and attacks on high-net worth individuals and executives.

“How would you feel if someone took your bank account and published it on the internet?” Axel asked the jury. “You would feel exposed and probably unsafe.”

Axel told the jury that they would hear testimony from a host of victims and hackers, none of which could be directly connected to Roman Storm. The hackers, she said, were only testifying “in the hopes that they can get leniency in their own criminal cases” and that Storm lacked the power to help their victims.

First witness

After opening statements concluded, the government called its first witness, a Taiwan-born Georgia resident named Hanfeng Ling. Ms. Ling told the court how she was the victim of a pig butchering scam in the fall of 2021, that began with a wrong-number Whatsapp message. The scammer convinced Ling to transfer nearly $200,000 from her savings account to purchase crypto and then “invest” the crypto in a fake foreign exchange trading platform.

Ms. Ling’s testimony will continue on Wednesday. Nathan Rehn, the lead prosecutor, told the court that he expects her testimony will be followed by four more government witnesses on Wednesday.

The bulk of Storm’s trial is expected to take place over three weeks, followed by jury deliberation.

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