US prosecutors want Tornado Cash co-founder Roman Storm to forfeit his homes valued at $3.1 million and a Tesla SUV that were paid for with allegedly ill-gotten money, according to court papers.

It marks the latest twist in a legal saga that has galvanised crypto’s cypherpunks, who say the crackdown on Tornado Cash poses an existential threat to the development of open source and privacy-preserving software.

In May, Tornado Cash developer Alexi Pertsev was sentenced to a five-year prison term after he was convicted by a Dutch court of laundering $2.2 billion in illicit assets on the crypto mixer.

Now Storm’s trial — originally scheduled to begin December 2 — has been postponed until April. Storm has asked on social media for fresh donations to fund his defence.

Legal bills

An organisation soliciting donations for Storm and Pertsev has estimated the defence would cost $500,000 per month.

Launched in 2019, Tornado Cash lets users obfuscate the flow of crypto on Ethereum.

Popular with privacy-conscious users, it also became a magnet for cybercriminals looking to launder stolen tokens.

In 2022, the US sanctioned Tornado Cash, citing its use by hackers affiliated with North Korea.

In August 2023, Storm was charged with three counts of conspiracy: to commit money laundering; operate an unlicensed money-transmitting business; and violate US sanctions.

“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,” his indictment reads.

Tesla Model Y

In a court document filed on Friday, prosecutors amended the original indictment and asked the court to order Storm to forfeit his 2022 Tesla Model Y and two homes in Washington state.

One, in Auburn, was last sold in 2023 for $1.8 million, according to real estate websites Zillow and Redfin. The other, overlooking Lake Tapps, last sold in 2021 for $1.3 million.

According to prosecutors, that property represents “the amount of proceeds traceable to” Storm’s alleged crimes.

Storm’s team has argued that creating Tornado Cash was protected by the First Amendment of the US Constitution, which guarantees free speech.

In September, Judge Katherine Failla of the Southern District of New York denied Storm’s request that she dismiss the case, expressing scepticism of that defence.

“It is true that computer coding can be expressive conduct protected by the First Amendment,” she said.

“But when a programmer is using a code to direct a computer to perform various functions, that code is not protected speech.”

Third party responsibility

Crypto advocates blasted Failla’s argument.

“We believe the responsibility for third party criminal use of open- source software should lie with those third parties who intentionally use tools for illicit purposes, not the creator of the neutral tool,” Amanda Tuminelli, chief legal officer at the DeFi Education Fund, told DL News.

Jake Chervinsky, chief legal officer at crypto venture fund Variant, concurred, calling the legal argument “an assault on the freedom of software developers everywhere.”

While the Netherlands’s free speech rights differ from those in the US, a Dutch court rejected Pertsev’s argument that he was not legally bound to monitor or block illicit financial transactions on Tornado Cash.

“Tornado Cash in its nature and functioning is a tool intended for criminals,” Judge Henrieke Slaar said. “The criminal user is fully facilitated.”

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

Aleks Gilbert is a DeFi correspondent based in New York. Have a tip? Contact him at aleks@dlnews.com.