The U.S. Department of Justice is seeking to keep part of the criminal case against Tornado Cash co-founder Roman Storm in New York, even as the Treasury Department steps back from a proposed reporting regime for cryptocurrency mixers.
According to CryptoSlate, prosecutors told Judge Katherine Polk Failla in an Oct. 5 filing that Storm’s challenge to the venue for two counts should be rejected. The counts concern alleged conspiracies involving money laundering and operating an unlicensed money-transmission business. Tornado Cash is a cryptocurrency mixer, a service designed to make transaction histories more difficult to follow by combining or routing funds in ways that obscure links between senders and recipients.
The filing relies in part on a Sept. 25 decision by the U.S. Court of Appeals for the D.C. Circuit in United States v. Sterlingov, a separate case involving the Bitcoin Fog mixer. Prosecutors are presenting that decision as persuasive support for trying Storm on the relevant counts in the Southern District of New York.
Why prosecutors say New York is the proper venue
The government’s venue argument focuses on a Manhattan customer, Shakeeb Ahmed. Prosecutors say deposits linked to Ahmed contributed to the pool of funds that made transactions harder to trace, even though the money remained in the pool for only a short time.
They also argue that service provided to a customer in the district is enough to support venue for the money-transmission count. The latest filing therefore addresses where the case may be tried, rather than resolving the larger dispute over whether Storm’s conduct was criminal.
Storm has argued that he is being threatened with imprisonment “for writing code.” He has contrasted the prosecution with the Treasury’s decision to withdraw its proposed reporting measure, a comparison that highlights the broader debate over privacy-focused software and the responsibility of its developers.
Storm was convicted in August 2025 on one money-transmission conspiracy count. That count carries a statutory maximum sentence of five years. An Aug. 25, 2026 court order set his retrial for April 26, 2027, citing his pending motion for acquittal and a requested postponement.
Treasury withdrawal does not end the prosecution
The Financial Crimes Enforcement Network, or FinCEN, is withdrawing a 2023 finding and proposed enhanced reporting and recordkeeping requirements for international cryptocurrency mixing. The withdrawal notice was filed Oct. 5 for publication on Oct. 6.
FinCEN cited concerns that the proposed approach could discourage legitimate activity and create burdens for financial institutions. The agency also recognized that people may use crypto tools for lawful financial privacy while maintaining monitoring requirements related to money laundering, terrorist financing and other illicit activity.
That action is administrative. It does not repeal criminal offenses, determine whether Storm is guilty or not guilty, or dispose of the venue dispute before Judge Failla.
The Justice Department has drawn a similar distinction. A memo issued by Deputy Attorney General Todd Blanche on April 7, 2025, directed prosecutors away from targeting mixers solely because of users’ conduct or because of unwitting regulatory violations. It also called for reviews of ongoing cases.
However, the memo excluded Section 1960(b)(1)(C), which concerns funds known to have come from criminal activity or intended for unlawful purposes, from that restriction on regulatory charging. In August 2025, DOJ official Matthew Galeotti said qualifying software developers could receive protection against new charges under that provision when software is genuinely decentralized, only automates peer-to-peer transactions, and leaves third parties without custody or control of users’ assets. Other charges could still apply if criminal intent were present.
The unresolved question is developer responsibility
The government’s case turns on more than whether Tornado Cash was used by people seeking to conceal criminal proceeds. Prosecutors describe Storm as having built, maintained and profited from a service while knowing that it transmitted such funds. Storm disputes the application of criminal law to his development work.
At an April 9, 2026 hearing, prosecutor Ben Arad argued that legitimate deposits could help conceal criminal funds and therefore supported the government’s case against the developers. He distinguished the knowledge and perspective of ordinary depositors from that of Storm and his alleged co-conspirators.
Judge Failla questioned whether the government’s broader theory established the required willful conduct. Arad later emphasized what prosecutors describe as active efforts to maintain and improve the service, rather than simply allowing its existing pools to continue operating.
The case is separate from the pardon granted to Ross Ulbricht on Jan. 21, 2025. That clemency applied to Ulbricht and specified convictions; it did not extend to Storm or create a general exemption for cryptocurrency developers.
Current crypto market picture
Moneyiar market data at 10:44 on Oct. 7, 2026, showed Bitcoin at $83,638.39130508, down 2.91% over 24 hours and 0.27% over seven days. Filecoin was $1.055621673, down 10.32% over 24 hours and 1.73% over seven days. Polygon (prev. MATIC), now identified in the supplied data by the symbol POL, was $0.1024257201, down 7.22% over 24 hours and 11.59% over seven days. The supplied Polygon record listed the symbol MATIC and the unit دلار without a price.
