Prosecutors demand $3.1m in luxury houses and Tesla from Tornado Cash defendant

US prosecutors have settled on a new demand for Tornado Cash co-founder Roman Storm. They claim that they traced properties amounting to $3.1m bought with proceeds from illegal Tornado Cash operations.

According to real estate websites Zillow and Redfin, one of the properties in Auburn was last sold in 2023 for $1.8 million. The other, overlooking Lake Tapps, was last sold in 2021 for $1.3 million, hence the demanded amount.

According to the prosecutors, Tornado Cash knowingly enabled large-scale money laundering. However, the defendant’s advocates argue that Storm’s actions are protected under free speech laws. 

US prosecutors want to claim Storm’s properties

Tornado Cash gained popularity as a tool for concealing crypto transactions, which criminals have also exploited for money laundering. In 2022, the U.S. imposed sanctions against the service, citing its use by hackers affiliated with North Korea’s Lazarus Group. 

Last year, Storm was hit with three charges, including committing money laundering, operating an unlicensed money-transmitting business, and violating US sanctions.

The US Prosecutors stated, “Claiming to offer the Tornado Cash service as a ‘privacy’ service, the defendant, in fact, knew that it was a haven for criminals to engage in large-scale money laundering and sanctions evasion.” 

Storm’s advocates have argued that creating Tornado Cash is protected by the First Amendment of the US Constitution, which guarantees free speech. However, in September, Judge Katherine Failla of the Southern District of New York argued that “When a programmer is using a code to direct a computer to perform various functions, that code is not protected speech”

In the Netherlands, where the free speech rights are from those of the US, a Dutch court rejected another developer, Pertsev’s argument that he was not legally bound to monitor or block illegal financial transactions on Tornado Cash. 

Now, Pertsev is appealing the ruling. In July, a judge denied his request to be released so he could prepare his appeal.

Storm’s trial, originally scheduled to begin on December 2, has also been postponed until April.  

Despite all this, Storm is ready to give it another try. He has asked on social media for fresh donations to fund his defense. This is after an organization solicited donations for Storm, and Pertsev estimated the defense cost to be $500,000 per month.

The adjournment could work in Storm’s favor as Trump would have taken office by then. Following his support of crypto, new crypto regulations could be introduced, which could help buff his arguments and the defense’s case.

Tornado Cash ties with criminal enterprises

Tornado Cash is a crypto transaction privacy program developed on the Ethereum blockchain. It allows a user to deposit several types of crypto into a shared pool and then receive a transaction key.

‍The user has to choose a crypto and the amount they want to deposit to Tornado Cash. Then, the user connects their crypto wallet to Tornado Cash to initiate the transaction. It then generates a security key specific to the deposit, which the user copies.

‍Once the transaction is authorized and completed, Tornado Cash puts the deposited crypto in a shared pool, where it’s disassociated from the depositor’s crypto wallet address.

Tornado Cash makes it impossible to tell what crypto in a pool belongs to which person and who is sending crypto to whom. It also allows the same person to use different crypto wallets. However, the main problem with this technology is that it is often used by criminals to make it easier to get away with multiple types of crypto fraud.

Crypto privacy advocates have expressed strong opposition, arguing that developers should not be held responsible for the misuse of their tools. Crypto privacy can be argued as a requirement for the security of crypto entities, but it seems the US does not agree.

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