Brief Overview:
• The U.S. Department of Justice (DOJ) opposed Roman Storm’s motion to dismiss the lawsuit in the Tornado Cash case.
• The arguments raised by the DOJ challenge traditional understandings of the money transmission business, which has caused widespread concern in the industry.
•Legal experts criticized the DOJ’s stance, noting the broader implications it could have for privacy and self-custody of cryptocurrencies.
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The U.S. Department of Justice has opposed Tornado Cash platform developer Roman Storm’s motion to dismiss the case, a stance that has caused concern in the cryptocurrency market.
In a court filing dated April 26, the DOJ explained why it believes Tornado Cash co-founder Roman Storm should be held accountable.
In a court filing dated April 26, the DOJ explained why it believes the Tornado Cash co-founder should be held accountable for the alleged crimes.
Crypto community wary of DOJ objections
The DOJ has filed multiple charges against Roman Storm and Roman Semenov, two developers of Tornado Cash, a cryptocurrency mixing service, including conspiracy to launder money, operating an unauthorized money transmission business, and violating sanctions imposed by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
Given the severity of the allegations, the agency believes the true nature of Tornado Cash’s service should be left to a jury to determine, and it also expresses its objection to Storm’s attempt to dismiss the charges by explaining how its service worked.
In addition, law enforcement has questioned Storm’s claim that Tornado Cash is not a money transmission business because of the lack of control over the flow of funds. The U.S. Department of Justice has made it clear that control over funds is not a prerequisite for determining whether a business is a money transmission business.
The DOJ’s legal team noted that “the definition of ‘money transmission’ in Section 1960 does not require that a money transmitter have ‘control’ over the funds being transmitted. The definition covers ‘the transmission of funds by any and all means on behalf of the public.’”
This stance of the DOJ has caused widespread concern in the cryptocurrency field. Many industry experts pointed out that the verdict in the Tornado Cash case may have a significant impact on the entire industry. Caitlin Long, CEO of Custodia Bank, specifically emphasized that the Justice Department’s expansion of the definition of money transmitter is in opposition to existing guidance from the Financial Crimes Enforcement Network (FinCEN) and marks a major “shift.”
Fund DeFi’s chief legal officer Amanda Tuminelli also criticized the U.S. Department of Justice’s (DOJ) stance, pointing out that the DOJ’s filing contained technical errors and misapplication of the law.
Tuminelli added: “DOJ’s opposition to Roman Storm’s motions to dismiss and exclude evidence in the Tornado Cash case is riddled with technical errors and demonstrates a clear disregard for privacy and emerging technologies, as well as a misapplication of the law.”
Similarly, Seth, editor of Freedom.Tech, noted that the government may be looking to self-custody personal cryptocurrencies in the long term, citing examples from the U.S. Department of Justice’s (DOJ) objections that suggest this is the government’s intention.
Seth concluded that the DOJ is trying to expand the definition of "money service business" (MSB). The purpose of this may be to be able to impose new regulations on those who provide services that facilitate the use of cryptocurrencies, especially when these services involve protecting user privacy. In other words, the U.S. Department of Justice may be seeking greater power to regulate and prosecute individuals or organizations that promote the use of cryptocurrencies and provide privacy protection.
Meanwhile, the U.S. Department of Justice (DOJ) has faced a backlash from the community as the U.S. government steps up its enforcement efforts in the cryptocurrency space. Earlier, media reports said that authorities arrested the co-founder of Samourai Wallet, a cryptocurrency mixer. Samourai Wallet is a cryptocurrency mixing service that allows users to mix cryptocurrencies in a series of transactions to increase anonymity, making it more difficult to track the flow of funds. #TornadoCash #DOJ