Prosecutors in the Southern District of New York have fired back at a defense bid from Tornado Cash co-founder Roman Storm, arguing that his attempt to rely on a recent Supreme Court ruling doesn’t apply as his team presses for a judgment of acquittal ahead of a key hearing this week.
In a letter filed Tuesday, U.S. Attorney for the SDNY Jay Clayton told Judge Katherine Failla that Storm’s April 2 motion — which cited the Supreme Court’s Cox Communications, Inc. v. Sony Music Entertainment decision — “offers no help” to the defendant. The Cox case, a civil dispute over an internet service provider’s liability for subscriber copyright infringement, found the ISP not contributorily liable because it neither induced infringement nor tailored its service to facilitate it.
Clayton said the facts here are “strikingly different.” The government points to evidence that Tornado Cash’s founders deployed only superficial anti-abuse measures — measures they allegedly described as “easy to bypass” — and that these half‑measures were intended to distract law enforcement rather than prevent criminal use. “The defendant and the Tornado Cash service are a far cry from Cox,” Clayton wrote, calling the founders’ compliance efforts “window dressing at best and outright misdirection at worst.” The filing emphasizes that prosecutors have found no credible evidence the founders put effective anti‑money‑laundering controls in place.
That record matters because OFAC sanctioned Tornado Cash in August 2022, citing failures to prevent malicious actors — including the North Korea-linked Lazarus Group — from laundering about $455 million through the mixer. Those sanctions were later overturned in March 2025 after a Court of Appeals decision in November 2024 concluded that OFAC had exceeded its authority by sanctioning immutable, decentralized smart contracts rather than a legal entity.
The dispute comes amid continuing litigation over criminal charges against Storm. He was indicted after the sanctions and faces counts including conspiracy to commit money laundering, conspiracy to violate sanctions, and conspiracy to operate an unlicensed money‑transmitting business. A jury last August convicted Storm on the unlicensed money‑transmitting count but deadlocked on the other two charges — a hung jury that does not amount to an acquittal and leaves open the possibility of retrial.
In March, prosecutors asked Judge Failla to set retrial dates for the two unresolved counts between October 5 and 12, 2026. Storm’s defense has moved for acquittal under Rule 29, arguing the government never proved he intended to knowingly facilitate laundering — a theory the defense says would undermine criminal liability. Prosecutors and defense counsel are scheduled to present oral arguments on the Rule 29 motion on April 9, a hearing that could materially affect whether the remaining counts proceed to a new trial.
The clash highlights a larger legal battle over liability and culpability in the crypto space: how courts treat decentralized protocols, what degree of intent or control is required to criminalize developers’ conduct, and how precedents from other industries translate to blockchain services. This week’s proceedings could sharpen those boundaries.
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