Dec 20, 2023

CoinDesk managing editor for global policy and regulation Nikhilesh De shares an update on legal developments for Tornado Cash developer Roman Storm, after he pleaded not guilty to charges of conspiring to operate a money transmitter or facilitate money laundering and sanctions evasion.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right. Tornado Cash was a big story in 2023. We of course saw a few developers arrested on charges related to money laundering. Joining us now is Coin desk global policy and regulation. Managing editor Nick Day to unpack. What might happen with Tornado Cash as we move into 2024 Nick. Good morning. Good morning. All right. Tornado Cash was a big story in 2023. We've also seen some politicians latch on to the narrative here. The issue at hand is, should developers be arrested for the charges that they were for developing a tool that anyone can use for good or bad? One of those developers is Roman Storm. What are you expecting to see uh with the charges laid against him as we move into 2024. Yeah. So Roman Storm is currently set to go on trial in September of 2024. Uh in the months leading up to that, we'll see, you know, arguments and amicus briefs from different parties about, you know, what kind of evidence they want to use what kind of uh you know, arguments we they might use. So the, you know, as you say, one of the questions is, you know, was Storm arrested for developing the code. The DOJ alleges that, you know, Roman Storm, his co-founder, Robert Semenov and his other co-founder, Lexi Kurt, who is facing charges of his own in the Netherlands. Uh whether they controlled the, you know, tomato cash, uh you know, the system, the protocol, the smart contracts, uh where, you know, the allegations are basically like they control it, they profited off a bit. And so they're being held liable for not having, you know, not implanting KYC or blocking militia actors from using cash. But yeah, a philosophical question is, are they really being arrested and, you know, charged for, you know, you know, not blocking people from using this uh protocol that they say that they gave up control over. Um And what does that mean for coders and developers? And generally, you know, more broadly how people in crypto or other areas, uh how they are going to be held liable if you're gonna be held liable for things that may well be outside of their control. So give me a very interesting case to watch over next year. I believe Storm is under house arrest in the United States. Now he's a US citizen and a Russian citizen. We have his co-founder Pertz who, as you said is off in the Netherlands. Do you think we'll see different outcomes based on the different jurisdictions, the different regions that they're in. It is very possible. So in the background, here is tornado Cash was sanctioned by the US Treasury Department's Office of Foreign Asset Control, the sanctions watchdog in 2022 for uh allegedly allowing North Korea's Lazarus group to launder funds including from some of the more famous hacket machines such as uh a infinity uh through the Toronto Cash uh Mixer, which is a privacy tool uh without stopping them. So per was actually arrested right after uh the sanctions came down in 2022 he spent quite a bit of time in jail in the Netherlands and I believe he was only just released ahead of trial. Recently, relatively recently, uh Roman Storm was arrested this past year. So within the last few months after a second round of sanctions were kind of re implemented. Um basically on, you know, charges of, you know, controlling this protocol, allowing the North Korean, you know, hacking group and other militias actors to use the protocol and to use the mixer. And so the cases are genuinely kind of different, but it's also the fact that the different legal systems, it's different uh you know, standards of evidence. So it's really hard to say how similar or different the outcomes might be at this stage. And you know, when the trials themselves are gonna start, you know, maybe even see similar pieces of evidence brought up and they could still have, you know, different outcomes. All right, Nick, we're gonna have to leave it there. We'll of course, be following the story very closely in 2024. And anyone who wants to follow along should subscribe to the state of crypto newsletter. Nick is the editor of that newsletter and all of his wonderful insights are in there. Nick, thanks so much for joining Aggie that was Coindesk global policy and regulation. Managing editor Nick Day.

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