OK - now in US v. Roman Storm, Axel crossing IRS-CI George, US about to rest its case. Inner City Press put out book about the case Crypto Tornado & will live tweet, thread below
Storm's lawyer Axel: In your review, were there transactions not related to Torn?
IRS-CI Agent George: Yes, Ma'am.
Axel: You found USDT coming out of the Binance account?
George: Yes.
Axel: To a pseudonymous wallet?
George: Right. I used communications from DOJ
Now: US summary witness O'Sullivan
AUSA: Mr. O'Sullivan, please look at the binder in front of you
Judge: Is this an exhibit?
AUSA: For now it is just a demonstrative... Mr. O'Sullivan, in the chart in front of you, are the dates plotted and are they accurate?
Yes
AUSA: What is this message?
O'Sullivan: From Roman Storm to a Tom Schmidt (sp), Storm wrote, I suggest this kind of message, about the governance vote and the relayer registry
[Note: Defense says they want Schmidt give immunity by Judge Failla in order to testify
AUSA: What is this?
O'Sullivan: A tweet on X by Tornado Cash.
AUSA: Please show the Medium post... What happened to the price of TORN after March 1st?
O'Sullivan: It spiked.
Cross examination.
Storm's lawyer Axel: So Mr. O'Sullivan, on this day, TORN was worth $22 and BTC tens of thousands of dollars - how do you chart them together?
O'Sullivan: We just compare the percentage change in price.
Judge: Let's take our midmorning break
[Jury leaves]
Judge: Are we now at the government's last witness?
AUSA: Yes.
Judge: Will there be exhibits en masse?
AUSA: For example the OFAC exhibit
Storm's lawyer Patton: We have objections.
Storm's Patton: People may have thought their money went to Tornado Cash, but it has to be proved
AUSA: It's about notice to the defendant - this is often done in money laundering case. We've separately argued that victim complaints are evidence of state of mind
Judge: These could be mistakes, or trolls. But I understand your point.
Storm's lawyer Patton: We have a whole series of objections to these. The jury may believe that people must have had some basis to being their money had gone to Tornado Cash
Break
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They've back
Judge: Governmentn, call your next [and last] witness.
AUSA Rehn: The Government calls Angelica Cotto... Where do you work?
Cotto: I'm a paralegal at SDNY Illicit Finance Unit.
AUSA: A stipulation: OFAC listed the Lazarus Group, and ran searches...
AUSA: OFAC finds no licenses issued to these Tornado Cash parties. Please show Exhibit 1915.
AUSA: Ms. Cotto, what's this?
Cotto: An $882,000 agreement signed by Roman Storm
AUSA: What does this say?
Cotto: Like the shirt? Sure. Seriously going to need to make some.
AUSA: Exhibit 1347, expand it. You read Roman Storm. [Assumes voice] The permissionless nature reduces the value
Cotto (as Storm) It is possible
AUSA: And who wrote these messages?
Cotto: Roman Storm. He wrote, I told him everything if f*cking great... I am working on the UI myself, I am fixing a small bug but I don't think it f*cking matters.
AUSA: 2014-T
Cotto: Storm wrote
AUSA (in character) F*ck!
AUSA: 2121-T. What does Roman Storm say?
Cotto (as Storm) Two are in favor and one in against. We can therefore issue the TORN.
AUSA: I will be Pavel... We will do movie style opening credit for you. There is an attachment. We can send you TNN tokens.
AUSA: What did Roman Storm write?
Cotto He wrote, this is terrible, it feels like Windows 95 when there was already Windows 7. I can't show this.
AUSA: Is this the Peppersec team chat? Read it
Cotto: Roman Storm writes, Nova bugs, issue with refresh on tab.
AUSA: What did Roman Storm write next?
Cotto: He wrote, I think everything will be OK but it is necessary to set up a company in Dubai.
AUSA: 2135-T. What did Roman Storm write?
Cotto: He wrote, We guy a guy to design UI, pretty, experience with crypto useful
AUSA: What did Roman Storm write?
Cotto: He wrote, His mom thinks Tornado Cash is about laundering money.
AUSA: What did they message about here?
Cotto: Indictments of Silk Road people.
Judge: How much longer?
AUSA: Rehn: An hour
Judge: Cross?
Patton: Short
THey've back [4 jurors took a long lunch]
AUSA Rehn: Could you read the first message
Cotto: I ask him to help with Tornado.
AUSA: Let's play the audio file. [It's in Russian] Now the translation, show it to the jury.
Cotto: New task for some f*cking reason
Cotto: Roman Storm wrote, I spoke with DragonFly
AUSA: Admit the attachment...Let's move to the translation.
Cotto: He just suggested we take the fee in Ethereum, we can just send that fee to governance. We could split that dough, say, just give us the money dude
AUSA: What did Roman Storm write?
Cotto: He wrote, We don't f*cking block anything at the front, they could go after us
AUSA: What did Roman Storm write next?
Cotto: He wrote, we need to hand it over and then say, The worker is not the owner
AUSA: What did Roman Storm write?
Cotto: He wrote, As for why should it be forked, it was so it would be impossible to turn on any commission for us. I doubt that such a commission is or is not OK, as it is there is some level of control over the protocol.
AUSA: What did Roman Storm write?
Cotto: He wrote, the community doesn't f*cking like this anymore.
AUSA: And response from Pertsev?
Cotto: He wrote, I think you are being paranoid about FBI.
AUSA: Email from Darko, can you read it?
Cotto: For our audit, this form
AUSA: The question: Does your company send international transactions?
Cotto: They said no. Then Darko said, Thanks for filling out the crypto questionnaire, Roman.
AUSA: And this?
Cotto: Inquiry from Taiwan authorities inquiry about use of Tornado Cash
Sidebar
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Judge: Mr. Rehm, all you exhibits are in, and witnesses in?
AUSA Rehn: Yes. The Government rests.
Judge: May I see the parties at sidebar?
[After sidebar]
Judge: Jurors, the US rested, and motions were made. Defendant is not required to put on a case. I am advised that Mr. Storm would like to put on a case. There is one brief witness he will put on today - then I will let you go for the day.
1st defense witness: Preston Van Loon
Storm lawyer Klein: Where do you live?
Van Loon: Nashville, Tennessee. I am an Ethereum developer. I have contributed meaningfully since 2018. It is exciting & novel with promising use cases
Klein: Did we pay your travel?
Yes
Storm's Klein: Did you go to a conference in Boston, Eth Boston?
Van Loon: It was a hackathon too
Klein: Like a coding competition?
Van Loon: Yes.
Klein: What is Tornado Cash?
Van Loon: A privacy tool for Ethereum
Van Loon: You can make a deposit and withdrawal and there is no connection.
Storm's Klein: Have you used it?
Van Loon: Four times. For privacy reasons. It has to do with operational security and personal safety. You try to limit the amount of info adversaries have
Judge: Who are the potential adversaries?
Van Loon: Anyone in the world potentially.
Storm's Klein: Hackers?
Van Loon: Yes.
Klein: You have concerns for your personal safety?
Van Loon: Yes. If they know the scope of my assets I can become a target.
Storm's Klein: Nothing further.
Judge: Cross.
AUSA Mosley: You don't know Roman Storm?
Van Loon: I don't.
AUSA: You don't know his motives?
Van Loon: I don't.
AUSA: Do you have accounts at a normal crypto platform like Coinbase?
Van Loon: Yes.
AUSA: When did you deposit at Tornado Cash?
Van Loon: 21 Eth, 10 Eth, and 1 and 1, in 2019 or 2020.
AUSA: For privacy. But only four transactions?
Van Loom: Yes.
AUSA: Did you use another mixer?
Van Loom: I did. Privacy Pools.
AUSA: Nothing further.
Judge: I'll let the jury go.
[Jury leaves]
OK: Rule 29 motion, Government in support of Count 1
AUSA Rehn: Our case is based on Roman Storm running Tornado Cash for two years knowing it involved criminal proceeds.
Judge: But was it designed to aid money launderers, hackers, fraudster?
AUSA: Yes.
AUSA Rehn: The defendant understood the core market was people who wanted to engage in money laundering. The reason they continued to create features was this. The defendant paid for blockchain traffic. One of their developers quit...
AUSA Rehn: This is like Silk Road... And the founders of Tornado Cash were talking about law enforcement, they could have change things. The defendant was sitting on TORN tokens, which increase in value along with increased volume: it's an affirmative act
Count 2
Storm's new(bie) lawyer: I hope you excuse my first time jitters
Judge: We'll all friends there. Let me ask, if there had been an agreement several months in to make it an unlicensed money transmitted, wouldn't that be enough?
Storm's lawyer: No intent
Storm's lawyer: They never had custody of the funds.
Judge: That is preserved for appeal, from the motion to dismiss. You can move on.
Storm's lawyer: Tornado Cash is not a business - it does not charge fees or generate profits.
Judge: Post-Banki, are fees needed?
Storm's lawyer: I would need to conference...
Judge Failla: Yes
Storm's lawyer: Yes, we think fees are still required. And here, there were not profits. Bram said there was no fee.
Judge: But what about the intention to seek profits? DragonFly?
A: It's personal
Judge: Government?
AUSA Rehn: There was a business, and all acts to maintain it are acts in furtherance.
Judge: The payments to Infura, Last Mile, Pinata, they're all overt acts?
AUSA Rehn: Yes. We point to when the rolled out the TORN tokens, and were aware
AUSA: Paying for the website is overt act. The defense has a view that there is a single thing called Tornado Cash - but we point to hawala -
Judge: I am aware of that.
AUSA: The relayers are acting in concert.
Judge: Count 3.
Storm's lawyer Axel: The IEEPA charge is after the relayer registry. Nothing change from April to August 22. This is about negiglence, not criminal. Failure to prevent someone from using a software tool is not violating IEEPA.
Storm's lawyer Axel: He did implement a safeguard. There is no mens rea.
Judge: Mr. Rehn?
AUSA Rehn: The blocked property issue is more appropriate to the charge conference.
Judge: When can I expect your letter on Count 3?
AUSA: We'll work on it tonight.
Storm's lawyer: On Count 1, knowledge and intend has to be directed at specific transactions. We preserve our Constitutional arguments. As to venue, there has to be an overt act in furtherance in the District - Mr. Schmidt may have been in NY, but did Storm know?
Judge: Mr. Rehn?
AUSA Rehn: Venue on Count 1 is straight forward.. For example the payments to Infura through its Chase account in Manhattan, Storm made 17 payments into it
Judge Failla: I am reserving on the motion - I'm letting this case go to the jury. Who are the defense witnesses tomorrow?
Storm's lawyer Klein: Dr. Edmond, Malekan, and as a standby, Stephanie Herbert. On Chainalysis we are working on a stipulation
Judge: On Chainalysis are you talking with the Government?
Storm's lawyer Klein: We don't know if Sullivan & Cromwell is speaking with them.
Judge: I don't want jury delay in tomorrow AM as recently.
Klein: We have a remote witness with a personal issue
Judge: Do you have witnesses to fill Monday?
Storm's Klein: I do believe we do. Then there's the question of if Mr. Storm testifies. If not, we would not need all of Tuesday, I do not think.
Judge: Maybe we'll have a charge conference on Monday late
Judge: We have a juror who is headed to Puerto Rico, she told us from the beginning.
AUSA: We have an issue with Professor Malekan.
Klein: He's a Tornado Cash user
Judge: Why are you putting him on?
Klein: They put on people who didn't even use it.
AUSA: He used Tornado Cash as a protest after the sanctions.
Judge: We are not going to have that! Some sort of ridiculous protest
Klein: He used it as a teaching tool
Judge: Only about before August 2022. You made your bed
AUSA: We will cross him-
Judge: Don't be stupid.
AUSA: I am not a stupid person.
Judge Failla: I'll accept that proffer
AUSA: As long as he doesn't expound on so-called privacy rights
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