DOJ Tornado Cash Arguments Show ‘Clear Disregard for Privacy’ – Lawyer
The US's arguments to sue crypto mixer Tornado Cash and developer Roman Storm show a “disdain for privacy” and include some “outrageous statements”, according to Amanda Tuminelli, head of legal for the DeFi Education Fund.
On April 26, the Justice Department denied Storr's motion to dismiss the conspiracy and money laundering charges that Tuminelli said on April 27 X's posts were “riddled with technical errors, a clear disregard for privacy and technology, and an abuse of the law.”
Tuminelli argued in an episode of X that the DOJ stated that Storm is “completely immune to computer software violations” and that crypto is “inherently beyond the reach of law enforcement.”
“This is not what Hurricane argued in his motion,” Tumminelli wrote. “It is difficult to imagine how this is not deliberately misleading.”
Tuminelli also countered that prosecutors “could have done something about the alleged illegal activity of Tornado Cash by Storm and co-founder Roman Semenov, but chose not to” because of how immutable smart contract protocols work.
The DOJ also “completely ignores” arguments in support of the dismissal of the DeFi education fund’s amicus brief storm lawsuit — which Tuminelli “took as a compliment.”
In it, the advocacy group argued that the International Emergency Economic Powers Act (IEEPA) — the president's regulatory authority against “extraordinary and unusual” threats — should never be used and should not be used to punish a software developer not directly involved. Made with or requested by an authorized party.
“The Seminal Crypto Court Case”.
Meanwhile, observers say a separate part of the prosecution's 111-page response could have far-reaching implications for crypto and internet freedom.
The DOJ argued that the definition of money transfer under US law “does not require the remitter to ‘control' the money being transferred” and that it “is transferred in any and all manner on behalf of the public.”
Anonymous industry analyst L0la L33tz wrote in an April 27 post that the DOJ's broad argument “could be prepared [dangerous] Prerequisites for Internet Freedom”.
They said that “any provider that distributes financial transactions”, including internet service providers, could face the risk of being forced into KYC. “Did Grandma send $50 in the mail? Clearly, the postman is running a financial services business.
Another observer, Treasury Secretary John Paul Koening, wrote on X that the case against Storm “could be a seminal crypto court case” and that “nobody really knows who is responsible for smart contracts and the interfaces that access smart contracts, and to what extent.”
“I'm not worried (yet)” about the DOJ's arguments turning decentralized application operators into money transmitters, wrote crypto-focused attorney Gabriel Shapiro on X.
He believed the issue would come down to relayers and the crypto mixer's Tornado Cash (TORN) token.
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“Relayers made Ethereum txs to users (including paying for gas). TORN showed an economic interest in the relay enterprise,” Shapiro explained.
By comparison, in most DApps, the user transfers on Ethereum — for example, paying for their own gas or through a node that's “owned by the wallet operator, not the DeFi web app operator,” he added.
“[Relayers] It literally paid for gas to consumers,” Shapiro wrote. “Surely that constitutes a ‘money transfer' as a matter of law? We'll check it out, but at least it's close to the line.
Hurricane testing is currently scheduled for September. Semenov is still on a roll.
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