Advocacy groups caution against negative impacts on cryptocurrency from the lawsuit involving the Tornado Cash Co-founder

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Advocacy groups have raised concerns about potential negative impacts on the cryptocurrency industry stemming from the legal proceedings against Tornado Cash co-founder Roman Storm.

The Blockchain Association, Coin Center, and DeFi Education Fund have jointly supported a motion for the U.S. government to dismiss charges against Storm. In filings dated April 5, submitted to the U.S. District Court for the Southern District of New York, the advocacy groups argued that Tornado Cash did not exert control over the funds or messages transmitted through the cryptocurrency mixer.

They further contended that the three felony counts facing Roman Storm should be dismissed, citing First Amendment issues regarding allegations of violating sanctions and the U.S. government’s purported misunderstanding of the relationship between smart contract protocols and their developers in relation to money laundering accusations.

Marisa Coppel, Head of Legal at the Blockchain Association, expressed concerns about the potential ramifications of adopting the government’s legal theory, stating, “Adoption of the government’s legal theory would not only have adverse repercussions for the digital asset industry but also raise serious concerns regarding fintech more generally.” Coppel urged the court to dismiss the charges, emphasizing the importance of upholding defendants’ rights and preserving the integrity of the digital asset sector.

The U.S. Justice Department had announced charges against Storm and co-developer Roman Semenov in August 2023. Storm pleaded not guilty to all charges and is currently free on a $2 million bond, with travel restrictions imposed. Semenov’s whereabouts are unknown at present, while Storm is scheduled to stand trial in September.

In a separate incident, Tornado Cash developer Alexey Pertsev was arrested in the Netherlands in August 2022, accused by Dutch authorities of involvement in North Korean hacking groups using the crypto mixer to launder illicit funds totaling around $1 billion. Pertsev was released after approximately nine months in jail.

All three cases are linked to the U.S. Treasury’s Office of Foreign Asset Control listing crypto addresses associated with Tornado Cash as Specially Designated Nationals—sanctioned entities. Some crypto advocates have filed lawsuits against the U.S. Treasury in response, but both cases are awaiting appeal following unsuccessful summary judgment motions.

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