Tornado Cash cofounder Roman Storm was released on bail on Thursday, Aug. 24, a day after the software developer was charged with money laundering and sanctions violations in the United States, according to his lawyer Brian Klein.
Storm was arrested on Aug. 23 in Washington. The U.S. government charged him and fellow founder Roman Semenov with laundering $1 billion in criminal proceeds, including hundreds of millions of dollars for stated-backed North Korean hacking group Lazarus.
Defending freedom of speech
Posting on X, the platform previously known as Twitter, Storm’s lawyer Brian Klein said the Tornado Cash cofounder had been released on bail. Klein did not provide further details about the bail conditions.
“Pleased to share that my client Roman Storm is already out on bail,” Klein wrote, adding that he was “very disappointed” prosecutors charged Storm with developing the software behind Tornado Cash.
“Their [prosecutors] novel legal theory has dangerous implications for all software developers,” he said.
Several people responded to Klein’s tweet by offering to donate money to help with Storm’s legal case.
“This is the same as punishing a car manufacturer because someone used their car as a weapon to run over protestors,” he added.
— Roman Semenov 🇺🇦 🌪️ (@semenov_roman_) August 24, 2023
What is Tornado Cash?
Tornado Cash is an Ethereum-based tool used by some cryptocurrency investors to obscure their transactions, making it harder to trace. Many people use the service for legitimate reasons like privacy. But bad actors have also leveraged Tornado Cash for illicit activities.
Last year, the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC) sanctioned the crypto-mixer after allegations that the Lazarus Group used it to launder funds stolen from several high-profile cryptocurrency hacks.
The Federal Bureau of Investigation accuses Lazarus of stealing around $620 million from Axie Infinity’s Ronin Network bridge last year, and another $100 million from crypto startup Harmony.
Blockchain analytics firm Elliptic found at least $1.5 billion in proceeds from crimes such as ransomware, hacks and fraud have been laundered through Tornado Cash.
Dev arrest raises privacy concerns
On Wednesday, the U.S. Department of Justice (DOJ) charged Roman Storm and Roman Semenov with conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business, and conspiracy to commit sanctions violations.
Storm was immediately arrested, but Semenov, a Russian national, remains at large. U.S. Attorney Damian Williams accused the duo of “knowingly facilitating” money laundering via their cryptocurrency mixing service.
Alexey Pertsev, another Tornado Cash cofounder, who is not included in the DOJ indictment, faces trial in Netherlands, where he was arrested in 2022 on allegations of money laundering.
Pleased to share that my client Roman Storm is already out on bail, although I remain very disappointed that the prosecutors charged him because he helped develop software – their novel legal theory has dangerous implications for all software developers.https://t.co/elmU8VqpYq
— Brian Klein (@brianeklein) August 24, 2023
Per the Justice Department’s indictment, Storm and Semenov ignored regulatory demands involving know your customer or anti-money laundering programs, and instead, advertised that Tornado Cash “provided untraceable and anonymous financial transactions.”
Earlier, Brian Klein criticized both the arrest and the charges brought against his client.
“Mr. Storm has been cooperating with the prosecutors’ investigation since last year and disputes that he engaged in any criminal conduct. There is a lot more to this story that will come out at trial,” Klein said in a statement.
The DOJ’s charges against Tornado Cash and its founders have caused serious concerns about the future of privacy in the crypto industry, with some observers suggesting “this is the end of privacy.” Privacy is a key tenet of the Bitcoin and cryptocurrency ethos.