Tornado Cash dev Roman Storm begins criminal trial with fight over chat records

The highly-anticipated criminal trial of Tornado Cash co-founder Roman Storm began Monday with jury selection and an arcane dustup: Whether private messages and pictures furnished by Apple, X, and a venture capital firm are “business records.”

The wrangling over technical and legal minutiae could be a sign of things to come: Judge Katherine Polk Failla suggested Storm’s trial could last four weeks — one fewer than the marathon trial of Sam Bankman-Fried in November 2023.

Jurors in that trial found the shaggy-haired crypto mogul guilty of one of the largest financial frauds in US history.

The stakes of Storm’s trial are even higher, touching on free speech and the future of software development in the US, according to his supporters.

The prosecution’s case relies on a novel theory, they say: that by simply writing code, Storm conspired to help cybercriminals launder stolen crypto and evade US sanctions.

“Today, the target is Tornado Cash,” crypto advocacy firm DeFi Education Fund wrote in a summary of the case.

“But under such a sweeping interpretation, tomorrow it could be the developers of a VPN, an encrypted messaging app, or a peer-to-peer file sharing tool.”

Prosecutors, in turn, have said Storm and co-founder Roman Semenov knew Tornado Cash was being used to launder dirty crypto and declined to take meaningful steps to stop cybercriminals from using the protocol.

Dressed in a crisp, checkered shirt tucked into blue pants, Storm appeared upbeat on Monday, happily greeting supporters outside the cavernous courtroom in lower Manhattan.

Hearsay

Last week, attorneys for Storm asked the judge to bar prosecutors from introducing evidence furnished by X, Apple, and crypto venture capital firm Dragonfly, as well as evidence extracted from the phone of Alexey Pertsev, a Tornado Cash developer who is appealing a money laundering conviction in the Netherlands.

Evidence extracted from Pertsev’s phone included a Telegram message Storm received in March 2022: “Would like to ask a few general questions about how one goes about cashing out 600 mil.”

It was a reference to the $600 million hack of Axie Infinity, which authorities attributed to hackers affiliated with North Korea. The hackers laundered the stolen crypto through Tornado Cash, according to prosecutors.

Prosecutors have said that message was authored by Pertsev, a fact that would suggest the Tornado Cash developers were, at the very least, unconcerned about the protocol potentially being used to launder dirty crypto.

But Pertsev didn’t send that message.

It was authored by a reporter at CoinDesk, who had reached out to Pertsev for comment after the Axie hack. Pertsev then forwarded the message to Storm. But the way in which prosecutors formatted the evidence extracted from Pertsev’s phone obfuscated the source of forwarded messages, according to Storm’s attorneys.

Storm’s attorneys said the issue invalidated any supposed evidence gleaned from Pertsev’s phone.

“Because of the sheer number of forwarded messages sprinkled throughout the Telegram messages, it is impossible to have confidence in these government exhibits,” they wrote on Friday.

Storm’s attorneys also said that other data extracted from Pertsev’s phone was “cherry-picked,” possibly excluding exculpatory evidence, and that it could have been tampered with, though there was no evidence to suggest this happened.

But Failla, the judge, said she wouldn’t entertain such remote hypotheticals. As for messages from Pertsev’s phone, Failla said she believed the government would be able to authenticate the source of any forwarded messages shared during the trial.

Storm’s attorneys also attempted to block prosecutors from sharing images and messages they acquired after sending subpoenas to Apple, X, and Dragonfly.

Prosecutors have said those images and messages are “business records” exempt from laws barring the use of hearsay as evidence.

Brian Klein, an attorney representing Storm, argued those images and messages were the property of users, rather than the businesses that stored them.

But Judge Katherine Polk Failla appeared unconvinced.

“It’s a point you’re not making very well,” she told Klein after an extended back-and-forth.

The defense team did notch a minor victory Monday morning when Failla said it could talk about standard practices among other crypto mixers.

“It’s not an ‘Everyone is doing it’ defense, which would have troubled me,” the judge said.

Cause célèbre

Like other crypto mixers, Tornado Cash is software that cloaks the flow of crypto on the Ethereum blockchain.

In 2022, the US sanctioned the protocol over its alleged role in helping North Korean hackers launder stolen crypto. In November, however, a federal appeals judge said the government had overstepped its authority when it first levied the sanctions. The Treasury Department removed the sanctions in March.

In August 2023, prosecutors charged Storm and Tornado Cash co-founder Roman Semenov with conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business, and conspiracy to violate US sanctions.

Semenov remains at large.

Storm has raised more than $1.9 million for his defense, according to freeromanstorm.com. Donors include Ethereum co-founder Vitalik Buterin, RAI founder Ameen Soleimani, the Ethereum Foundation, and venture capital firm Paradigm.

Paradigm, several crypto trade associations, and the Electronic Frontier Foundation have submitted legal briefs in Storm’s defense.

Storm has said he faces up to 45 years in prison if he is found guilty, according to freeromanstorm.com.

Aleks Gilbert is DL News’ New York-based DeFi Correspondent. Reach out to him with tips at aleks@dlnews.com.