DoJ Says Tornado Cash Knowingly Facilitated Illicity Transactions
Federal prosecutors responded to the Tornado Cash co-founder's motion to dismiss with a 111-page court filing
April 28, 2024 04:59 AM
Reading time: 1 minute, 41 seconds
TL;DR In a significant court filing, the DOJ has responded to Tornado Cash co-founder Roman Semenov's motion to dismiss charges. The DOJ alleges that the platform continued operations, knowing it facilitated illegal transactions. The government's stance highlights the case's complexity, focusing on actions beyond mere code writing, including profit from illicit activities and inadequate measures against sanctioned entities.
In a comprehensive 111-page court filing, federal prosecutors have presented their counterarguments against Roman Semenov, a co-founder of Tornado Cash, who sought to dismiss charges against him.
The document delves into the intricacies of the case, alleging that the crypto mixing service was not merely a tool but a commercial enterprise designed for profit, with its founders, including Semenov, fully aware of its use for laundering illicit funds.
"Guys, we are fucked."
This brief message, purportedly sent by Semenov to his fellow founders, encapsulates the government's argument that the Tornado Cash team was aware of the platform's misuse for illegal purposes.
Despite this knowledge, prosecutors have accused the founders of taking insufficient steps to curb the laundering activities, especially those conducted by the notorious Lazarus Group, a cybercrime syndicate with ties to North Korea.
The filing criticizes the team for their 'ineffective' UI changes intended to block OFAC-sanctioned wallets, which failed to halt the group's operations.
Behind the Scenes of Tornado Cash
The prosecutors have painted a detailed picture of how Tornado Cash allegedly facilitated money laundering. They claim that while users could interact with the platform's smart contracts directly, the vast majority relied on a user interface and a relayer network controlled by the co-founders.
According to the government, that effectively made Tornado Cash a money-transmitting business, a characterization Semenov disputes.
The Government's Stance on Code and Liability
Addressing the broader implications of the case, the government seeks to narrow the focus, arguing that their case does not question the legality of writing code per se but targets the specific actions Semenov and his team took in maintaining and profiting from Tornado Cash.
That includes allegations of transferring substantial sums to unidentified wallets, underscoring the operational aspects beyond mere coding.
As the legal proceedings unfold, this case may set important precedents for the cryptocurrency industry, particularly concerning developers' responsibilities and the legal boundaries of decentralized platforms. The outcome could have far-reaching implications for balancing innovation and regulation in the rapidly evolving digital asset space.
