Byron Gilliam

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Some cried. Many have not slept.”



— Jury note to the judge in United States v. Peraire-Bueno
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<h2 class="wp-block-heading">No honor among bots?</h2>



Throwing a pitch in the dirt — even deliberately — is not a crime.&nbsp;



Nor is choosing to throw a pitch above or below 94.5 miles per hour, as prosecutors in the Eastern District of New York have also accused Emmanuel Clase and Luis Ortiz of doing.



Instead, the two Cleveland Guardians are charged with crimes that happened off the field: wire fraud, money laundering and bribery.&nbsp;



It shouldn’t be difficult to prove.&nbsp;



Evidence includes text messages the accused sent to co-conspirators letting them know their next pitch would be in the dirt — and, yes, the texts were sent during games.



To convict, prosecutors need only show that the defendants and their co-conspirators placed bets on these pitches.



Any jury will understand that as fraud: Betting on an event you know is fixed defrauds the person on the other side of the wager.



Jurors therefore only have to be shown two things: that the event was rigged, and that the bets were placed.



By contrast, the jury weighing the same charges — wire fraud and money laundering — in the Ethereum-exploit case United States v. Peraire-Bueno faced a much harder task.



Unlike the MLB case, what happened was not in dispute: The brothers Peraire-Bueno made $25 million by tricking Ethereum sandwich bots into being sandwiched themselves.



But why would that amount to wire fraud or money laundering?



Prosecutors said the brothers “stole” the money — but theft was not among the crimes they were charged with.



Like the MLB pitchers, the brothers were charged with actions (wire fraud and money laundering) that can only happen off the field and off-chain, respectively.



In the pitch-rigging case, what happened off the field was the betting.&nbsp;



In the crypto case, what happened off-chain was simply the profits being moved around — partly, the brothers said, to pay taxes on their hard-earned capital gains.



For that to be a crime, prosecutors had to show that someone, somewhere was defrauded by the Peraire-Bueno brothers’ exploit.



This is what the jury had to decide: not what had happened, but who, if anyone, was defrauded.



After lengthy deliberations, the jury ultimately decided not to decide: On Friday, United States v. Peraire-Bueno ended in a mistrial.



Based on a <a href="https://www.amazon.com/Crypto-Bros-Mistrial-Code-Lives-ebook/dp/B0G1FDLT15/ref=sr_1_2?crid=7NCPU2I2Q8XT&amp;dib=eyJ2IjoiMSJ9.Cdc5Zfkalds8XUHRh-TQjxzZHLU9tazqeuPK_hR9XjAVi4HDVQfowwJKmjOEu4hXYcbuTOUJcm9JkQo8sBU3_CiCQZtPfo7UbmXUgViqd0w0N44LF5RqQTV-MyXKlEi_sLTF7T9H05efhOTxxJjWu_BIba_VaS_dIc0NlHq-gi7YlS7YCNo8vszb5AwhIwy5EXDiHBOmtihJQq3O1QeuZFp3AIA1EBW_H5eGrfNMvQY.yR_dOLohPQ-HnBiZbymRDfeB3k-6HpLwBpJR-WHJ6A8&amp;dib_tag=se&amp;keywords=crypto+bros&amp;qid=1762808762&amp;sprefix=crypto+bros%2Caps%2C149&amp;sr=8-2">transcript of the trial</a>, I’d say they made the correct decision.



<h2 class="wp-block-heading">If the analogies don’t fit, you must acquit&nbsp;</h2>



Prosecutors argued that the operators of the MEV bots who lost money to the Peraire-Bueno brothers’ MEV bots were the victims of fraud.



The brothers, they said, “engaged in false pretenses by holding themselves out as an honest validator,” which fraudulently duped MEV-sandwich bots into trading with them.



In that telling, the bots are like the unsuspecting sports bettors wagering that Emmanuel Clase would throw a strike against people who knew for sure he’d throw a ball.



No one thinks that’s fair.



The defense, however, countered that “posing as an honest Ethereum validator is a nonsensical allegation.”&nbsp;



Validators are just code, they reasoned, and it’s impossible for code to “pose” as honest or dishonest, or anything at all.



“When did this posing happen?” the defense asked, adding that everything happened in code and the code was there for anyone to read.



This, in effect, was what the jury was asked to determine: Can code be dishonest?



Unfortunately, the Ethereum code in question is impossibly complex.



Peter Van Valkenburgh seems to speak for the few who understand both Ethereum code and the law when he <a href="https://x.com/valkenburgh/status/1985374963201626603?s=20">concludes</a> that the Peraire-Bueno brothers “profit maxed up to the limit of Ethereum&#8217;s consensus rules.”



Playing by the rules is never a crime — but in the case of Ethereum, what jury would understand them? The defense repeatedly tried to make Valkenburgh’s line of reasoning more accessible with references to the far-simpler world of sports:



“This is not Charlie Brown’s football.”



“In football, you take a knee and get penalized.”



“In NFL football, you decide to take a delay of game penalty.”



“This is crypto, not college basketball.”



“This is like stealing a base in baseball.”



I doubt any of that got the jury any closer to understanding the rules of Ethereum consensus.&nbsp;



But the prosecution responded with its own, less-flattering analogy, comparing the brothers’ exploit to “walking into a casino with a device that allows you to game the system.”



It might have helped if either side explained how that system worked, but neither did.



The prosecution also added the term “shitcoin” to the legal lexicon, perhaps to make the whole operation seem even more disreputable than a casino.&nbsp;



In cross-examinations, the defense invoked O.J. Simpson and The Sopranos Season 1, to no obvious purpose.



Predictably, the cumulative effect of all this for the jury was confusion.



“We are under stress,” the jury wrote to the judge late in their deliberations. “Yesterday, some cried. Many have not slept.”



Judge Clarke, having endured the same parade of analogies, was sympathetic to their plight: “This is their 11th note,” she told the attorneys. “No progress. I’m going to declare a mistrial.”



It was the only decent thing to do.



Afterward, an exhausted juror told <a href="https://x.com/innercitypress?s=20">Inner City Press</a> that the case “was just too complicated.”



Of course it was.&nbsp;



The rules of Ethereum are infinitely more complex than the rules of baseball, and jurors were given nowhere near enough information to understand them.



Can one MEV bot truly deceive another?



Can what happens on the playing fields of Ethereum warrant a conviction on real-world crimes?



It will take more than sports analogies to decide.&nbsp;



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DeFi

Crypto trials need clearer explanations of DeFi and its rules

Macauley Peterson

Yesterday’s <a href="https://blockworks.co/news/roman-storm-guilty-one-count">partial verdict</a> in U.S. v. Roman Storm is about more than the fate of one Tornado Cash developer. It dampens hopes of giving DeFi protocols greater access to the US market by sending chills through the entire open‑source community.



Storm was found guilty under <a href="https://www.law.cornell.edu/uscode/text/18/1960">18 U.S.C. § 1960(b)(1)(C)</a>, which treats noncustodial code as &#8220;money transmitting&#8221; and thus a criminal offense, if it&#8217;s used by anyone for illicit purposes. In the <a href="https://x.com/preston_vanloon/status/1953137607853871516">words</a> of Ethereum core developer Preston van Loon: “This is a dark day for crypto and [Roman Storm].”



<h2 class="wp-block-heading">Sketchy legal foundations</h2>



At issue in rendering a verdict was how § 1960 defines “money transmission.” The law requires transmitting funds on behalf of the public and has traditionally meant moving others’ money as a custodial intermediary — not publishing permissionless code. Yet SDNY prosecutors convinced the jury that deploying <a href="https://blockworks.co/news/tornado-cash-sanctions-expose-potential-defi-achilles-heel">immutable smart contracts</a> meets that definition.



Coin Center executive director Peter Van Valkenburgh spoke to the flawed logic in <a href="https://twitter.com/i/spaces/1vAxRDQZeDDGl">a must-listen X space</a> on Wednesday: “I can’t transfer your funds if I don’t have them in my possession and in my control.” And yet that’s exactly how Storm’s Tornado Cash functioned: no custody, only code.



The government also shut out FinCEN’s own 2019 <a href="https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf">guidance</a> on the matter, which explicitly carves out non‑custodial software providers from Money Service Business (MSB) liability, as DeFi Education Fund&#8217;s Amanda Tuminelli explained: “The DOJ said they don’t have to listen to that guidance…They can come up with their own interpretation.”



That <a href="https://blockworks.co/news/doj-trial-tornado-cash-roman-storm">disregard for regulatory alignment</a> undermines legal clarity and due process.



<h2 class="wp-block-heading">A warning for every DeFi dev</h2>



What happens when writing neutral, useful software tools becomes laden with risk? This verdict signals that simply publishing code could mean criminal liability — regardless of intent or control. Yes, it’s just one case, but this guilty verdict still will embolden prosecutors and intimidate developers.



Even more alarming: It exemplifies how jurisdiction is elastic. Peter Van Valkenburgh aptly calls SDNY “the sovereign District of New York,” capable of reeling in any dev, anywhere, if even a single user in Manhattan runs your code. This worry is no longer theoretical. Between Storm’s conviction and the Samourai Wallet developers’ recent plea deal, it’s a blueprint for future prosecutions unless the law is changed, or the interpretation repudiated.



<h2 class="wp-block-heading">DOJ’s approach: Unfair, hypocritical and dangerous</h2>



Let’s call it what it is: Prosecuting a developer who doesn’t touch users’ funds while letting large financial actors facing multi‑billion‑dollar laundering scandals skate by is hypocrisy.



Compared to world-scale financial scandals involving multinational banks, the criminal case against Storm is outrageous. In cases like <a href="https://www.bbc.com/news/topics/cm8m6leejrkt">the 1MDB scandal</a>, where over $4.5 billion was siphoned from Malaysia’s sovereign wealth fund with the help of major global financial institutions, few individuals faced meaningful criminal consequences.



Goldman Sachs, which helped underwrite billions in 1MDB bond sales, ultimately reached a deferred prosecution agreement with the DOJ in 2020. The bank <a href="https://www.reuters.com/markets/asia/goldman-sachs-its-role-multi-billion-dollar-1mdb-scandal-2023-10-12/">paid $2.9 billion in fines</a> but avoided criminal conviction, and no senior executives were charged. Only one former banker for Goldman’s Asia group, Roger Ng, <a href="https://www.theguardian.com/world/2023/mar/09/roger-ng-goldman-sachs-banker-malaysia-1mdb-fraud#:~:text=Roger%20Ng%2C%20the%20former%20Goldman,frauds%20of%20the%20past%20decade.">received</a> a prison sentence, and the DOJ closed the matter in 2024 without further indictments.



By contrast, Roman Storm&#8217;s role was limited to writing and deploying open-source smart contracts that others used, yet even on the lesser money-transmitter count, he faces up to a maximum of five years prison time. (Storm himself <a href="https://x.com/EleanorTerrett/status/1953146088602427664">sounded an optimistic note</a> following the verdict.)



Legal experts argue that this represents <a href="https://blockworks.co/news/appeals-court-dismiss-tornado-cash-suit">a double standard</a> in enforcement. “If you don&#8217;t handle other people’s money,” said Van Valkenburgh, “you shouldn&#8217;t be held to the same regulatory expectations as a bank like Credit Suisse or Goldman Sachs.”



The DOJ’s approach not only criminalizes innovation but diverts enforcement resources away from large-scale financial misconduct that poses far greater systemic risk. While traditional financial institutions routinely secure settlement deals for billion-dollar offenses, developers facing felony charges will think twice before publishing open-source tools that promote privacy and financial autonomy.&nbsp;



<h2 class="wp-block-heading">Political remedies needed</h2>



The Blockchain Regulatory Certainty Act (BRCA), now tacked onto the <a href="https://blockworks.co/news/us-house-passes-clarity-act">CLARITY market‑structure legislation</a>, would codify that non‑custodial developers are not money transmitters, aligned with the <a href="https://blockworks.co/tag/fincen">FinCEN</a> guidance. Van Valkenburgh describes it as a “really good simple statutory drafting exercise to clamp the brakes on this abuse of prosecutions.”



But even if that makes it through Congress — still a big if — CLARITY isn’t retroactive, so it won’t help Storm. Yet it can spare future developers.



“There’ll be a moment in a couple of months where it might be important to call your senator,” Van Valkenburgh said.



On the other side of the regulatory spectrum stands SEC Commissioner Hester Peirce. In <a href="https://www.sec.gov/newsroom/speeches-statements/peirce-remarks-blockchain-conference-080425">a speech this week</a>, she emphasized financial privacy as a constitutional right and warned against treating privacy‑protecting code as criminal. She reminded us: “Denying people financial privacy — whether through sweeping surveillance programs or restrictions on privacy‑protecting technologies — undermines the fabric and freedoms of our families, communities, and nation.”&nbsp;



Peirce also preached disintermediation — the idea that technology should obviate the need for intermediaries, and not add new mandates. She warned against deputizing private actors to surveil each other, saying it’s “antithetical to a free society.”&nbsp;



These principles directly clash with SDNY’s approach: criminalizing neutral tools that enhance one’s financial privacy. Peirce’s vision is of protecting, not policing, innovation.



Storm’s legal team is expected to challenge the conviction in the Second Circuit Court of Appeals, focusing on the misinterpretation of federal law. Key legal questions were foreclosed during <a href="https://blockworks.co/news/tornado-cash-motion-to-dismiss-denied">pretrial motions</a>, not left for the jury, Tuminelli said. “The jury was fenced in on the 1960 charge because they weren’t given the opportunity to really make the decision on the part that’s most relevant… the definition of money transmission,” she said.



The outcome of the appeal could have major implications for the crypto ecosystem. Coin Center is also supporting <a href="https://www.coincenter.org/app/uploads/2025/01/Lewellen-v.-Garland.pdf">a related civil lawsuit</a> in Texas.



The CLARITY Act, while offering no retroactive relief, could lessen the impact of Storm’s guilty verdict, clarifying that publishing noncustodial code alone can’t be treated as a criminal act. Without reform, every DeFi dev runs a risk.



Crypto can feel directionless at times. However, this is a clear fork in the road: What’s decided in the months ahead will shape the future of crypto development both in the United States and outside of it.



Let Tuminelli’s warning mobilize us, Peirce’s plea for privacy guide us, and Van Valkenburgh’s strategy direct us.&nbsp;



The legal battle isn’t over, and the political one is still in the early innings.



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open source development

Opinion: Tornado Cash developer conviction raises alarm for open-source devs

Casey Wagner

The jury in cryptocurrency mixer <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a> developer Roman Storm’s criminal trial handed down a partial verdict Wednesday afternoon after four days of deliberation.&nbsp;



Storm was found guilty of conspiracy to operate an unlicensed money transmitter business. The jury was unable to reach a unanimous decision on the two other counts: conspiracy to commit money laundering and conspiracy to violate the IEEPA.&nbsp;



The jury deliberated for four days before coming to a decision on one of the counts. The government could opt to retry Storm on counts one and three.&nbsp;



The prosecution asked that Storm be remanded into custody, citing Storm’s “means” and ties to Russia, where he was born. The judge sided with the defense, determining Storm was not a flight risk and may remain out on bond.&nbsp;



The criminal trial, which spanned about three weeks, concluded last week with <a href="https://blockworks.co/news/roman-storm-closing-statements">lengthy summation arguments</a> from both the prosecution and defense. Storm did not testify during the trial.&nbsp;



Storm and co-developer Roman Semenov were <a href="https://www.justice.gov/usao-sdny/pr/tornado-cash-founders-charged-money-laundering-and-sanctions-violations">charged in 2023</a> with three federal counts. Semenov has not faced trial and is currently <a href="https://www.fbi.gov/wanted/wcc/roman-semenov">wanted</a> by the Federal Bureau of Investigations.&nbsp;



Throughout the trial, the government maintained that Storm, motivated by greed, intentionally helped illicit actors conceal funds through Tornado Cash.&nbsp;



“Tornado Cash made dirty money clean money, and made it impossible to tell the difference,” government attorney Benjamin Gianforti told the jury during his <a href="https://blockworks.co/news/roman-storm-closing-statements">closing statement</a> last week.&nbsp;



Storm’s team never denied that criminals used Tornado Cash, but they insisted that Storm had no criminal intent. Tornado Cash was created as a privacy tool for users who didn’t want their financial transactions made public, defense attorney Keri Axel said during opening statements.&nbsp;



Storm’s team did not immediately respond to Blockworks’ request for comment.&nbsp;



This is a developing story.



Correction note: Updated 8/6/2025 at 1:10 p.m. ET to reflect the jury decision on count 3. A previous version of this story incorrectly stated that Roman Storm was acquitted on count 3, conspiracy to violate the IEEPA. The jury was unable to reach a unanimous decision on this count.



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Roman Storm

Tornado Cash developer found guilty on 1 count in partial verdict

The presentation portion of Roman Storm’s criminal trial came to a close Wednesday afternoon with the prosecution and defense each making their final pleas to the jury.&nbsp;



Both sides spent over 90 minutes on their closing arguments. The government opted to close with an additional 45-minute rebuttal. Attorneys on both sides focused on the same essential facts of the case, but urged the jury to come to different conclusions.&nbsp;



“This is a story about greed,” government attorney Benjamin Gianforti said at the beginning of his closing arguments. “It’s a story about helping criminals hide bags and bags of money.”&nbsp;



“Tornado Cash made dirty money clean money, and made it impossible to tell the difference,” he added.&nbsp;



The defense does not argue the truth of this second statement: they admit that criminals did use Tornado Cash for illicit activities, but this was never Storm’s intent in creating the software.&nbsp;



Storm created Tornado Cash to give users the ability to keep their financial transactions private, defense attorney David Patton told the jury.&nbsp;



“Did that also make it extremely useful to criminals? You bet it did,” Patton said.&nbsp;



The “privacy argument,” prosecutor Nathan Rehn said during the government’s rebuttal, is simply a “cover story.”&nbsp;



Storm not only knew criminals were using Tornado Cash to launder money, he supported them, Rehn argued.&nbsp;



The government presented messages to the jury in which Storm calls reports of hackers using Tornado Cash “advertising.” They also submitted photos of Storm and his co-developers wearing Tornado Cash T-shirts with images of a laundry machine.&nbsp;



These messages and photos are a mischaracterization, Patton later insisted. The shirts were a joke, and there are many communications that show Storm was not “celebrating hackers’ use of Tornado Cash.”&nbsp;



As for the prosecution’s claims that Storm “made millions” from Tornado Cash, the defense again maintained that this was a misleading portrayal of reality. The money Storm made came from selling the TORN token, which, Patton added, lost value when reports of criminals using Tornado Cash surfaced.&nbsp;



“They weren’t getting a cut” of money hackers laundered through Tornado Cash, nor did developers charge fees for using the software, Patton added.&nbsp;



After two weeks of witness testimony, jurors received charge instructions late Wednesday afternoon, the final step before the group heads to the deliberation room.



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Tornado Cash trial is now in the jury’s hands

Ben Strack

“Nothing further from the defense,” attorney Brian Klein told Judge Katherine Polk Failla yesterday afternoon at Manhattan’s Thurgood Marshall courthouse.



The team representing Tornado Cash co-founder Roman Storm had cycled through what remained of its witness list, and Storm chose not to take the stand.&nbsp;



A reminder that Storm is being charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business.



His defense (and advocates of the privacy protocol) argue Storm isn’t criminally responsible for<a href="https://blockworks.co/news/treasurys-tornado-cash-sanctions-have-companies-stepping-back-from-users"> bad actors using</a> something he helped create.&nbsp;



Closing arguments were scheduled to begin at 9 a.m. “sharp” Wednesday — meaning in a matter of minutes (if you’re reading this when it publishes).&nbsp;



In the meantime, let’s go through Tuesday’s witnesses and some of the more memorable moments:



<h2 class="wp-block-heading">Guy Wuollet, partner at a16z crypto</h2>



Tuesday’s first witness, Wuollet had evaluated whether Andreessen Horowitz’s crypto/Web3 unit would invest in Tornado Cash in 2021.&nbsp;



In an email to Storm at the time, Wuollet wrote he was “impressed by the strength of the privacy” of Tornado Cash and “excited about the next iteration of the protocol.”



The reason a16z didn’t invest? Wuollet said the firm didn’t know if Tornado Cash would be profitable. “We will continue to be fans of Tornado Cash and to track its adoption onchain,” Wuollet added in the email.&nbsp;&nbsp;



When asked to acknowledge that crimes are committed on the blockchain, Wuollet paused before saying he thinks of it differently. “If someone robbed a store, I wouldn’t say the store was used in the crime.”



An attendee sitting to my left started laughing. The prosecution ended the cross-examination there.&nbsp;&nbsp;



<h2 class="wp-block-heading">Omid Malekan, Columbia Business School professor&nbsp;</h2>



Not on the stand long, Malekan said he used Tornado Cash in 2021 to purchase an Ethereum Name Service (ENS) name.&nbsp;



He used the protocol because he “didn’t want to put a bullseye on my back.”&nbsp;



The prosecution’s Ben Arad shouted out an objection. Failla asked Klein to control his witness.&nbsp;



<h2 class="wp-block-heading">Dr. Stephanie Hurder, founding economist of Prysm Group&nbsp;</h2>



We found out the defense has so far paid Hurder $120,000 for her time analyzing this case and being an expert witness. She reviewed Tornado Cash DAO proposals, TORN token price data, transactions on Etherscan, etc.&nbsp;



She countered several points previously brought up by the government about Tornado Cash’s supposed lack of decentralization. Hurder noted the protocol’s DAO was “well-designed and active” (55% of TORN tokens initially went to the DAO treasury) and that Tornado Cash founders did not have (or always use) their voting power on proposals.



She added that the founders did not have a direct hand in selecting entities on Tornado Cash’s relayer registry.



The government’s exchanges with Hurder were heated, with prosecutors getting her to acknowledge that bad actors have apparently used Tornado Cash to hide criminal proceeds. As we know, the case against Storm is more nuanced than that.&nbsp;



And in a reference to the vesting schedule for founders’ TORN tokens, a prosecutor asked: “Tornado Cash became less decentralized over time, right?”



Despite the government wanting only yes or no answers, Hurder got out: “The distribution of tokens became less decentralized. Yes.”



<h2 class="wp-block-heading">Dr. Matthew Green, computer science professor at Johns Hopkins University</h2>



Green, who helped create the <a href="https://www.researchgate.net/publication/286668243_Zerocash_Decentralized_Anonymous_Payments_from_Bitcoin">Zerocash</a> protocol, was brought in to emphasize the value of privacy.&nbsp;



Though he was intrigued with crypto and blockchain technology essentially from its outset, Green called the lack of privacy (i.e. public transactions) “a huge bug.”



He talked about the value of VPNs and credit-card tokenization in protecting individuals and institutions. At one point, I caught a juror dozing.



The Tornado Cash pools were immutable, Green confirmed — preventing hackers or founders from making changes there.&nbsp;&nbsp;



During the cross-examination, Arad asked Green whether the Tornado Cash website, user interface and relay registry could be changed. “Yes” to all three.



Also of note was Klein wanting Green to address the feasibility of a hypothetical user registry that one of the government’s witnesses, AnChain.AI’s Philip Werlau,<a href="https://blockworks.co/news/roman-storm-government-may-rest-case"> brought up last week</a>.&nbsp;



Green’s initial hesitation to respond and a subsequent sidebar with the judge meant that the question went unanswered.



But as this case winds down and the jury is charged, we’ll have other, more critical answers soon.&nbsp;



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Roman Storm trial: Witnesses play up Tornado Cash privacy, decentralization

The US government expects to rest its case against Tornado Cash co-founder Roman Storm on Thursday following yesterday’s anticipated testimony from an expert witness.



The defense is set to counter the prosecution’s efforts to show Storm could have better guarded against “bad actors” using Tornado Cash — the crypto mixer used for transaction privacy around which this case centers.



IRS Criminal Investigation special agent Stephan George took the stand to share findings that appeared to link a portion of the funds stolen from Hanfeng Lin to Tornado Cash.&nbsp;



Lin testified last week that a fraud recovery service told her to contact Tornado Cash about retrieving her funds. The defense was <a href="https://www.therage.co/tornado-cash-mistrial-hangfeng-lin/">reportedly</a> considering a mistrial motion after a subsequent witness, FBI Special Agent Joel DeCapua, didn’t link Lin’s funds to Tornado Cash — putting the relevance of Lin’s testimony in question.



But George said Wednesday he used public blockchain data — along with Chainalysis Reactor and TRM Labs — to find that a portion of Lin’s stolen funds that left Crypto.com ultimately went to Tornado Cash in November of 2021. 



He used an accounting method known as Last In, First Out (LIFO) — which assumes the disposal of crypto acquired most recently. When defense attorney Keri Axel challenged LIFO during cross-examination, George defended the method as a generally accepted accounting principle that the IRS “respects.”



Axel’s cross-examination of George was set to continue Thursday morning.&nbsp;&nbsp;



While the possibility of a mistrial was briefly mentioned in court Tuesday, the defense did not immediately comment about whether that’s still being considered.&nbsp;



&#8220;It&#8217;s usually not the situation that a trial is declared a mistrial merely because a witness&#8217;s testimony is not entirely germane,” Patrick Gruhn, a former partner at Crypto Lawyers LLC and FTX’s ex-head of Europe, told Blockworks. “Courts generally expect a lot more — egregious misconduct or prejudicial facts against the jury — before they suspend a trial.”



Though George linking Lin’s funds to Tornado Cash was an attempt by prosecutors to clear up a point of contention that arose, the charges against Storm go well beyond that.&nbsp;



At the heart of this case is whether Storm essentially helped criminals — such as North Korean state-sponsored hackers, The Lazarus Group — hide stolen funds, as the government alleges. He is charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business.



Key questions of the case, as shared in opening statements last week, include whether Tornado Cash was immutable and if the developer is responsible for how software is used.



Defense attorney Keri Axel said in her opening statement: “It’s not a crime to make a useful thing that is misused.”



Read more: <a href="https://blockworks.co/news/roman-storm-trial-opening-statements">‘He lied’: US government makes opening plea to jury in Roman Storm trial</a>



After the jury left the courtroom on Wednesday afternoon, the prosecution told Judge Katherine Polk Failla that it had two witnesses remaining and could wrap up by Thursday morning.&nbsp;



Though the defense had not finalized its slate of witnesses before the court let out on Wednesday, Storm’s attorneys said they could rest their case as soon as Monday. Storm has not yet decided whether he will take the stand, they added.



“I assume you don’t have a hacker testifying,” Failla quipped. “That would be interesting.”&nbsp;



<h2 class="wp-block-heading">Hacker takes the stand</h2>



The prosecution did put a hacker on the stand on Tuesday. That was Shakeeb Ahmed, who is currently serving a three-year sentence after <a href="https://www.justice.gov/usao-sdny/pr/former-security-engineer-sentenced-three-years-prison-hacking-two-decentralized">pleading</a> guilty to computer fraud last year. Ahmed, a former technical lead in Amazon’s bug-bounty program, detailed how he stole $12 million worth of crypto from exchanges Crema and Nirvana in 2022.



He put his own funds into a Tornado Cash pool to “anonymize” them before using a third party — known as a relayer — to withdraw them. He then went on to hack the Crema exchange. He did not use Tornado Cash at any point leading up to, or after, he hacked the Nirvana exchange.



The defense, during cross-examination, made clear to the jury that Ahmed never put stolen funds into Tornado Cash.&nbsp;



“You didn’t use Tornado Cash for the [hack] proceeds?” defense attorney David Patton asked.&nbsp;



“Correct,” Ahmed said.



Patton also asked whether Ahmed ever communicated with Storm and the other Tornado Cash founders, or conspired with them to commit crimes.



“I did not,” Ahmed noted.



<h2 class="wp-block-heading">Questioning Tornado Cash’s design choice</h2>



The prosecution sought to establish, through another witness, that Storm — along with Tornado Cash co-founders Roman Semenov and Alexey Pertsev — could have made changes to the protocol to guard against bad actors using it.&nbsp;



The Office of Foreign Assets Control (OFAC) deemed the Lazarus Group responsible for the $625 million Ronin Bridge hack in March 2022 and sanctioned the entity. Tornado Cash <a href="https://x.com/TornadoCash/status/1514904975037669386">said</a> the following month that it was using a Chainalysis oracle contract “to block OFAC-sanctioned addresses from accessing the dapp.”



Philip Werlau, an investigator at AnChain.AI, testified that — while that blocked sanctioned entities from using Tornado Cash’s web application — founders did not implement this control for deposits made via its Command Line Interface (CLI).&nbsp;



“If there are two doors to a building and you only close one, you’re not preventing access,” Werlau said.



Werlau also explained how Tornado Cash could have maintained an offchain registry with users’ personal info collected through a username-password system.



Anticipating this testimony, defense attorneys noted to the judge earlier that day that while Tornado Cash could have been designed differently, that doesn’t mean what Storm built was illegal.



This sentiment came out during the cross-examination, when defense attorney Brian Klein raised his voice — asking Werlau if one reason to make pools immutable would be to make them less subject to hacks. That could reduce the ways a pool could be attacked, Werlau acknowledged.&nbsp;



Klein then asked Werlau if he provides personal info when he uses the Ethereum blockchain.



As Werlau paused to think, Klein rephrased, almost shouting: “There’s nothing like the registry you proposed, is there?”&nbsp;



“That is correct.”



Werlau, seemingly uncomfortable with the confrontation, looked up at the clock. A break for lunch was not far off.&nbsp;



<h2 class="wp-block-heading">The scene and the stakes</h2>



This writer sat 20 or so feet from Storm over the last two days, even passing him during breaks en route to the bathroom and elsewhere. The Tornado Cash founder appears calm, but walks with pace.



Sitting next to Axel on the courtroom’s left side, Storm often gazes toward the judge, stand and jury, stone-faced, blinking infrequently behind his glasses. Occasionally, he will scribble something on a Post-It and hand it to a member of his defense team. This writer did not once see Storm roll his eyes or shake his head.&nbsp;



Trial attendance ranged from roughly a dozen to two dozen people on Tuesday and Wednesday — meaning there are plenty of empty seats.&nbsp;



While not as high-profile a case as the Sam Bankman-Fried trial, Blockchain Association legal head Marisa Coppel noted its outcome will shape how developers, regulators and policymakers navigate the future of crypto innovation.



“A conviction could set a dangerous precedent by criminalizing the act of writing and publishing open-source code, amplifying fears among US developers and pushing innovation offshore,” she told Blockworks. “An acquittal, by contrast, may reaffirm that software creation alone isn’t a crime and could help restore confidence in building decentralized tools.”



Keep an eye on Blockworks for more <a href="https://blockworks.co/tag/roman-storm">Roman Storm trial updates</a>. 



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Cybersecurity

Hacker, IRS agent take Storm trial stand as government winds down case

Prosecutors and the defense team painted vastly different pictures of Tornado Cash developer Roman Storm’s motives and role during the second day of his criminal trial in Manhattan.&nbsp;



The government’s lead prosecutor Kevin Mosley said Storm helped criminals hide their dirty money. The crimes were intentional and Storm acted out of greed, he said during the opening remarks.



Plus, Mosley added, Storm lied to victims of hacks and scams, telling them there was nothing he could do to help them locate their stolen money.&nbsp;



Defense attorney Keri Axel, however, had a different narrative for the jury. Yes, there may have been some bad actors who used Tornado Cash for illicit purposes, but that’s not Storm’s fault.&nbsp;



“It’s not a crime to make a useful thing that is misused,” she said in her opening statement.&nbsp;



Tornado Cash was decentralized, Axel said, so Storm couldn’t have interfered if he wanted to, and besides, isn’t a tool that provides financial privacy a public service?&nbsp;



Read more: <a href="https://blockworks.co/news/tornado-cash-motion-to-dismiss-denied">Judge denies motion to dismiss case against Tornado Cash founder</a>



The opening statements underpin the underlying questions this case seeks to answer: Was Tornado Cash immutable, and is the developer responsible for how a software was used?&nbsp;



The government also focused much of its opening statement on who used Tornado Cash, specifically North Korean state-sponsored hackers, <a href="https://blockworks.co/news/bybit-hack-paradigm-samczsun-north-korea">the Lazarus Group</a>. The Treasury Department’s Office of Foreign Assets Control (OFAC) alleges this group used Tornado Cash to launder roughly $455 million of the $620 Axie Infinity/Ronin Bridge hack in March 2022.&nbsp;



In their opportunity to address the jury, the defense leaned heavily on Ethereum developer Vitalik Buterin’s relationship with Storm. Tornado Cash was designed with the intention of helping Ethereum users solve a “huge problem” associated with onchain transactions: privacy.&nbsp;



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-tornado-cash">Judge rules Tornado Cash is not protected under the First Amendment</a>



Storm, who faces three federal charges, including conspiracy to commit money laundering, appeared calm during opening statements. He sat facing the jury with a straight face.&nbsp;



The jury, which was finalized Tuesday morning, consists of seven women and five men ranging in age from their 20s to 60s. One juror works as an IT manager and another works for Palantir, a software company with anti-terrorism and AI products.&nbsp;



The trial is expected to last 15 days in court, or roughly three weeks, according to attorneys on both sides.



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