- Storm’s defense was limited after the judge allowed only some private messages as evidence for the jury.
- Prosecutors allege Storm intentionally aided money laundering and operated an unlicensed business; he faces over 40 years in prison.
- An expert testified that anti-money laundering efforts on Tornado Cash were largely ineffective due to system limitations.
- Most cryptocurrency deposited in Tornado Cash could not be traced to criminal activity, according to the defense’s witness.
Roman Storm, co-founder of the cryptocurrency mixing service Tornado Cash, began his defense Monday in federal court in New York. He faces charges including conspiracy to launder money, operating an unlicensed money-transmitting business, and violating U.S. sanctions. The case is in its third and final week.
The federal judge, Katherine Polk Failla, allowed Storm to present only some private messages to the jury as evidence. The defense wanted to introduce more messages showing Storm’s concerns about cybercriminals using the platform, but the judge said most did not demonstrate Storm’s intent at the time the alleged crimes were committed.
Prosecutors told jurors that Storm’s main customers were money launderers and showed a government exhibit of Storm wearing a t-shirt displaying a washing machine and the Tornado Cash logo.
They must prove that Storm built and managed the platform specifically for cybercriminal activity.
Storm claims he created the service to provide privacy for blockchain users and that he could not stop criminals from abusing the protocol.
In one message allowed in court, Storm wrote about his relief when North Korean-linked Hackers, who reportedly laundered almost $100 million in stolen cryptocurrency through Tornado Cash, were caught, saying “I’m glad those…are detected.”
Matt Edman, a cryptography expert, testified for the defense that Storm and his team did implement anti-money laundering measures, although they could be bypassed. Edman explained that Tornado Cash used the InterPlanetary File System (IPFS), a decentralized storage solution, meaning old website content could not be removed.
This, he said, limited their ability to block criminal use. According to Edman, one anti-money-laundering tool blocked sanctioned wallets from the main site starting April 2022, but cybercriminals could get around these measures by using new intermediary wallets that government agencies could not sanction quickly enough.
Edman also told the court that 85% of funds processed by Tornado Cash between September 2020 and August 2022 were not linked to criminal activity. The defense plans to call up to six more witnesses, but Storm has not decided if he will testify. Closing arguments are expected later this week if Storm does not take the stand.
For more information on the laundering incident involving North Korean hackers and Harmony blockchain, see the original Elliptic analysis.
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