Venture capital firm Paradigm has submitted an amicus brief supporting Tornado Cash co-founder Roman Storm, emphasizing the need for the jury to clearly understand the legal definition of operating a money-transmitting business.
The jury must be provided with the full legal context
In an amicus brief filed on June 13 in a New York District Court, Paradigm contends that the jury must be clearly informed that a conviction against Roman Storm requires proof that he knowingly operated a money-transmitting business.
According to Paradigm, this means the prosecution must demonstrate that Storm charged fees, knowingly transmitted funds on behalf of the public, was aware he was handling proceeds linked to criminal activity, and had custody or control over the transferred funds.
An amicus brief is submitted by a party not directly involved in a case but interested in its outcome, offering the court additional insight or perspective.
Tornado Cash is a non-custodial crypto mixing protocol, meaning its developers never hold or control user funds. However, the U.S. Attorney’s Office in New York alleges that Roman Storm conspired to operate the service as an unlicensed money transmitter.
Writing code doesn’t make someone a money transmitter
In a blog post on Tuesday, Katie Biber, Paradigm’s chief legal officer, and Gina Moon, the firm’s general counsel, criticized the prosecution’s stance as “contrary to the plain text of the law, clear FinCEN guidance, and decades of case law.”
They pointed out that in 2014, under the Obama administration, the U.S. Treasury Department determined that developing software does not amount to the acceptance and transmission of value.
Biber and Moon also noted that in 2019, the U.S. Treasury Department emphasized that having total independent control over users’ crypto is a key factor in determining whether an intermediary qualifies as a money transmitter.
“Allowing this charge to proceed risks enabling unelected prosecutors to rewrite the clear meaning of criminal statutes—and expose ordinary citizens to imprisonment, even when they are acting in line with well-established regulatory guidance,” they warned.
Roman Storm and fellow Tornado Cash co-founder Roman Semenov were charged in August 2023, accused of facilitating the laundering of over $1 billion in cryptocurrency through the protocol.
A guilty verdict could also have a chilling effect on innovation
Biber and Moon emphasized that “the stakes of this matter are high,” warning that a guilty verdict against Roman Storm could stifle innovation and software development across the crypto and fintech sectors.
They cautioned that the implications could extend far beyond crypto, potentially affecting the broader open-source, AI, and tech communities by setting a precedent where developers are held criminally responsible for how others use their code.
“This is as absurd as prosecuting a television manufacturer for the sharing of state secrets on-air, leather wallet craftsmen for wallets holding stolen cash, or Apple for conspiracies formed through iPhone conversations,” they wrote.
Storm’s trial is set to begin on July 14. One charge—conspiracy to operate an unlicensed money transmitting business—was dropped on May 15, following an April Department of Justice memo clarifying it would not pursue charges against crypto mixer developers based solely on users’ actions.
