Crypto advocacy group Coin Center has criticized the latest indictment of two former Tornado Cash developers, arguing that the facts offered don’t show any clear violations of money-transmitting-related offenses.
Roman Storm and Romen Semenov were indicted by the United States Office of Foreign Asset Control (OFAC) on Aug. 23 for conspiring to operate an unlicensed money-transmitting business, among other charges.
In a follow-up opinion piece, Coin Center research director Peter Van Valkenburgh argues that the claims in the indictment appear to run counter to guidance from the U.S. Financial Crimes Enforcement Network — arguing that Tornado Cash only provides the software to transmit money, rather than transmitting the money itself.
New Tornado Cash indictments seem to run counter to FinCEN guidance
Coin Center’s initial thoughts on a case that could potentially criminalize the publication of software codehttps://t.co/YCBv3vsZAE
— Neeraj K Agrawal (@NeerajKA) August 23, 2023
“The only thing the indictment claims regarding the defendants’ unlicensed money transmission is that they ‘engaged in the business of transferring funds on behalf of the public’ and did so without registering with FinCEN,” wrote Valkenburgh.
But does the indictment state any facts that actually show that the defendants engaged in any activities that qualify as money transmission under the relevant law?
He pointed to an interpretation by FinCEN as to what constitutes “money transmission services” under the U.S. Bank Secrecy Act, which states:
“An anonymizing software provider is not a money transmitter.”
Valkenburgh then referred to another excerpt stating that only people using the software can be considered money transmitters:
“[A] person that utilizes the software to anonymize the person’s own transactions will be either a user or a money transmitter, depending on the purpose of each transaction.”
While Valkenburgh said that Tornado Cash made it easier for individuals to use the protocol’s smart contracts to transmit money, he argued it doesn’t mean that the developers were money transmitters themselves.
“[But] that doesn’t somehow mean that they became transmitters merely because they provided tools that others used to transmit their own money,” Valkenburgh explained.
Valkenburgh also criticized claims in the indictment suggesting that Storm and Semenov had complete control over the protocol’s smart contracts.
“Ethereum smart contracts are variable and sometimes people have no control over their operation, some control, or total control. This is the key fact needed to determine whether one is performing money transmission, he argued.
Related: Crypto lobbyists still fighting to axe ‘unlawful’ Tornado Cash sanctions
Coin Center first voiced its opposition toward the U.S. Treasury in October when it sued the agency for its unprecedented and unlawful sanctioning of Tornado Cash.
The OFAC indictment claims Storm and Semenov ran an unlicensed money transmission service by engaging in the business of transferring funds on behalf of the public. The enforcement agency claimed the developers should have registered with FinCEN.
Semenov was added to OFAC’s list of Specially Designated Nationals and Blocked Persons on Aug. 23, while Storm was arrested by the Federal Bureau of Investigation in Washington state on the same day.
Alexey Pertsev, another one of Tornado Cash’s founders, was imprisoned by Dutch authorities in Aug. 2022 before being released in late April.
Valkenburgh believes the outcome of the Tornado Cash saga will have a profound impact on the legal rights of United States citizens to build and publish software in the future.
Magazine: Magazine: Tornado Cash 2.0 — The race to build safe and legal coin mixers
Satoshi Nakamoto, the pseudonymous creator of Bitcoin, marks their 50th birthday amid a year of rising institutional and geopolitical adoption of the world’s first cryptocurrency. The identity of Nakamoto remains one of the biggest mysteries in crypto, with speculation ranging from cryptographers like Adam Back and Nick Szabo to broader theories involving government intelligence agencies. While Nakamoto’s identity remains anonymous, the Bitcoin (BTC) creator is believed to have turned 50 on April 5 based on details shared in the past. According to archived data from his P2P Foundation profile, Nakamoto once claimed to be a 37-year-old man living in Japan and listed his birthdate as April 5, 1975. Source: Web.archive.org Nakamoto’s anonymity has played a vital role in maintaining the decentralized nature of the Bitcoin network, which has no central authority or leadership. The Bitcoin wallet associated with Nakamoto, which holds over 1 million BTC, has laid dormant for more than 16 years despite BTC rising from $0 to an all-time high above $109,000 in January. Satoshi Nakamoto statue in Lugano, Switzerland. Source: Cointelegraph Nakamoto’s 50th birthday comes nearly a month after US President Donald Trump signed an executive order creating a Strategic Bitcoin Reserve and a Digital Asset Stockpile, marking the first major step toward integrating Bitcoin into the US financial system. Related: Bitcoin at 16: From experiment to trillion-dollar asset “At 50, Nakamoto’s legacy is no longer just code; it’s a cornerstone of economic sovereignty,” according to Anndy Lian, author and intergovernmental blockchain expert. “Bitcoin’s reserve status signals trust in its scarcity and resilience,” Lian told Cointelegraph, adding: “What’s fascinating is the timing. Fifty feels symbolic — half a century of life, mirrored by Bitcoin’s journey from a white paper to a trillion-dollar asset. Nakamoto’s vision of trustless, peer-to-peer money has outgrown its cypherpunk roots, entering the halls of power.” However, lingering questions about Nakamoto remain unanswered, including whether they still hold the keys to their wallet, which is “a fortune now tied to US policy,” Lian said. Related: Bitcoin’s next catalyst: End of $36T US debt ceiling suspension In February, Arkham Intelligence published findings that attribute 1.096 million BTC — then valued at more than $108 billion — to Nakamoto. That would place him above Microsoft co-founder Bill Gates on the global wealth rankings, according to data shared by Coinbase director Conor Grogan. Satoshi’s new addresses. Source: Conor Grogan If accurate, this would make Nakamoto the world’s 16th richest person. Despite the growing interest in Nakamoto’s identity and holdings, his early decision to remain anonymous and inactive has helped preserve Bitcoin’s decentralized ethos — a principle that continues to define the cryptocurrency to this day. Magazine: 10 crypto theories that missed as badly as ‘Peter Todd is Satoshi’
The United States stock market lost more in value over the April 4 trading day than the entire cryptocurrency market is worth, as fears over US President Donald Trump’s tariffs continue to ramp up. On April 4, the US stock market lost $3.25 trillion — around $570 billion more than the entire crypto market’s $2.68 trillion valuation at the time of publication. Among the Magnificent-7 stocks, Tesla (TSLA) led the losses on the day with a 10.42% drop, followed by Nvidia (NVDA) down 7.36% and Apple (AAPL) falling 7.29%, according to TradingView data. The significant decline across the board signals that the Nasdaq 100 is now “in a bear market” after falling 6% across the trading day, trading resource account The Kobeissi Letter said in an April 4 X post. This is the largest daily decline since March 16, 2020. “US stocks have now erased a massive -$11 TRILLION since February 19 with recession odds ABOVE 60%,” it added. The Kobessi Letter said Trump’s April 2 tariff announcement was “historic” and if the tariffs continue, a recession will be “impossible to avoid.” Source: Anthony Scaramucci On April 2, Trump signed an executive order establishing reciprocal tariffs on trading partners and a 10% baseline tariff on all imports from all countries. Trump said the reciprocal tariffs will be roughly half the rate US trading partners impose on American goods. Related: Bitcoin bulls defend $80K support as ‘World War 3 of trade wars’ crushes US stocks Meanwhile, the crypto industry has pointed out that while the stock market continues to decline, Bitcoin (BTC) remains stronger than most expected. Crypto trader Plan Markus pointed out in an April 4 X post that while the entire stock market “is tanking,” Bitcoin is holding. Source: Jeff Dorman Even some crypto skeptics have pointed out the contrast between Bitcoin’s performance and the US stock market during the recent period of macro uncertainty. Stock market commentator Dividend Hero told his 203,200 X followers that he has “hated on Bitcoin in the past, but seeing it not tank while the stock market does is very interesting to me.” Meanwhile, technical trader Urkel said Bitcoin “doesn’t appear to care one bit about tariff wars and markets tanking.” Bitcoin is trading at $83,749 at the time of publication, down 0.16% over the past seven days, according to CoinMarketCap data. Magazine: XRP win leaves Ripple a ‘bad actor’ with no crypto legal precedent set
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Nakamoto’s legacy: a “cornerstone of economic sovereignty”
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