DOJ Cites Bitcoin Fog Ruling in Tornado Cash Venue Fight

Federal prosecutors asked a New York judge to reject Roman Storm’s challenge to trying two conspiracy charges in Manhattan, citing a recent ruling involving Bitcoin Fog. The filing came as the Treasury Department moved to withdraw a proposed reporting and recordkeeping rule for cryptocurrency mixers.

In an Oct. 5 letter to U.S. District Judge Katherine Polk Failla, prosecutors in the Southern District of New York argued that Storm’s money-laundering and unlicensed money-transmitting business conspiracy charges can be tried in the district.

The government cited the D.C. Circuit’s Sept. 25 decision in United States v. Sterlingov, which involved Bitcoin Fog, a separate cryptocurrency mixer. Prosecutors argued that activity involving a customer in Manhattan can establish venue for Storm’s case.

Their argument centers on Shakeeb Ahmed, a Manhattan customer whose deposits allegedly helped expand Tornado Cash’s anonymity pool. The government contends that the deposits made criminal funds harder to trace, even though the funds remained in the pool for a short time. Prosecutors also argued that serving a customer in the district supports venue for the money-transmission conspiracy charge.

Storm co-founded Tornado Cash, software designed to obscure links between cryptocurrency deposits and withdrawals. The government alleges that he knowingly helped build, maintain and profit from a service used to transmit criminal proceeds. Storm disputes the characterization of his software work as criminal conduct.

At an April 9, 2026 hearing, prosecutor Ben Arad argued that deposits from legitimate users could help conceal criminal funds. He distinguished those users’ knowledge from the alleged knowledge of Storm and his co-defendants. Judge Failla questioned whether the government’s broader theory established that Storm acted willfully. Arad later focused on allegations that the developers actively maintained and improved the service rather than leaving its transaction pools available without changes.

Storm was convicted in August 2025 on one money-transmission conspiracy count. The charge carries a maximum sentence of five years. An Aug. 25, 2026 court order scheduled a retrial for April 26, 2027, citing a pending motion for acquittal and a request for more time.

Storm wrote on social media under the account @rstormsf that the case could lead to imprisonment “for writing code.” He compared the prosecution with the Treasury Department’s withdrawal of its mixer-reporting proposal.

The Financial Crimes Enforcement Network, or FinCEN, is withdrawing a 2023 finding and proposed reporting and recordkeeping requirements for international cryptocurrency mixing. The notice cited concerns that the requirements could create a “chilling effect on legitimate activity” and add burdens for financial institutions. FinCEN stated that it would continue monitoring money laundering, terrorist financing and other illicit activity while recognizing lawful financial privacy.

The withdrawal applies to an administrative reporting proposal. It does not repeal criminal offenses or resolve Storm’s case.

A Justice Department memo issued in April 2025 directed prosecutors away from targeting mixers solely because of users’ conduct or unwitting regulatory violations. The memo excluded charges involving funds known to come from crime or intended for unlawful activity.

In August 2025, Justice Department official Matthew Galeotti described limits on new charges involving qualifying software. The software would have to be truly decentralized, automate peer-to-peer transactions and leave the operator without custody or control of users’ assets. Other charges could remain available when prosecutors allege criminal intent.

The policy does not set aside Storm’s conviction. Prosecutors maintain that his alleged conduct involved knowledge of criminal use and active involvement in the service.

President Donald Trump’s Jan. 21, 2025 pardon of Silk Road creator Ross Ulbricht applies to Ulbricht’s specified convictions. It does not extend to Storm or create a general exemption for cryptocurrency developers.