OFAC’s Dropped Sanctions Against Tornado Cash Can’t Come Up at Trial, Judge Says

NEW YORK, New York — The U.S. Treasury Department’s Office of Foreign Asset Control’s (OFAC) sanctions in opposition to privateness instrument Tornado Cash can’t be mentioned at the upcoming trial of developer Roman Storm, a federal decide dominated Tuesday.

At a standing convention in Manhattan on Tuesday, District Judge Katherine Polk Failla initially waffled on whether or not she would enable skilled witnesses to testify concerning the sanctions, which have been initially imposed in August 2022, eliminated this March and subsequently discovered unlawful by a Texas court docket.

After listening to arguments from each the prosecution and the protection, Failla determined to grant Storm’s movement in limine shifting to ban testimony concerning the sanctions fully, arguing that it could merely be too complicated for a jury to do what she described because the “mental gymnastics” of understanding why the sanctions have been imposed and in the end eliminated.

“I am going to preclude references to the August 2022 OFAC sanctions,” Failla stated, with the caveat that she was leaving open the potential of a “unicorn document” — a key piece of proof for the prosecution that hinged on Storm’s alleged conduct after the sanctions have been imposed — that would change her thoughts earlier than the trial begins. Failla gave prosecutors till Wednesday to submit any such piece of proof. The decide had dominated earlier Tuesday that the events wouldn’t be allowed to debate the Van Loon v. Treasury Department case which in the end led to the sanctions being dropped.

The remainder of Storm’s motions in limine (a sort of pretrial movement to exclude sure proof or arguments from being allowed throughout trial) have been denied, together with a movement to preclude references to North Korea’s state sanctioned hacking group, the Lazarus Group, and a movement to preclude “inflammatory characterizations” of Storm’s TORN sales. Earlier in the day, prosecutors said they planned to introduce evidence demonstrating that Storm profited handsomely from his involvement in Tornado Cash, including allegedly purchasing multiple homes and selling $12 million worth of TORN tokens after OFAC sanctioned Tornado Cash.

Prosecutors said they do not plan to argue at trial that Storm violated the Bank Secrecy Act (BSA) by not implementing a know-your-customer/anti-money laundering protocol for Tornado Cash, only to express through their expert witness testimony that he could have and chose not to.

Failla also ruled to allow the government to produce evidence from Storm’s fellow Tornado Cash developer Alexey Pertsev’s phone. The Dutch government allowed a U.S. Federal Bureau of Investigation (FBI) agent to view a report of the contents of Pertsev’s phone, from which the agent made his own report with selected pieces of information. Storm’s defense attempted to get the Pertsev phone evidence tossed out, arguing that the report was cherry-picked and impossible to authenticate, but the judge sided with the prosecution, ruling that the report was admissible.

After much back and forth between the parties over their respective expert witnesses, Failla ruled that all of the witnesses could testify, though she put some guardrails on certain witnesses for both sides.

It is not yet clear whether Storm will testify in his own defense, though Failla said Tuesday that, should he take the stand, he will not be permitted to argue that he had First Amendment protections in his work with Tornado Cash.

Failla said that Storm was free to discuss his belief in privacy rights, but said: “I don’t think free speech or First Amendment rights should come up at this trial.”

A last pre-trial convention can be held telephonically at 3 pm ET on Friday. Storm’s trial is slated to start June 14 and is anticipated to run for 4 weeks.