Federal prosecutors invoked a new Bitcoin Fog appeal ruling on October 5 to keep two conspiracy counts against Tornado Cash co-founder Roman Storm in New York, even as Treasury moved the same day to withdraw its proposed mixer-reporting rule. The policy shift does not touch Storm's existing conviction or decide his pending venue challenge, which a judge must still resolve before his April 2027 retrial.
Prosecutors in the Southern District of New York are using a fresh appellate ruling to defend their choice of venue against Roman Storm, even as federal regulators moved to withdraw a broader mixer-reporting proposal. The Oct. 5 letter asks Judge Katherine Polk Failla to reject Storm's challenge to trying the money-laundering and money-transmission conspiracy counts in New York. Storm co-founded Tornado Cash, a cryptocurrency mixer that obscures transaction trails.
The filing landed the same day Treasury moved to pull back a broad mixer-reporting proposal. But the criminal case and the policy shift run on separate tracks: prosecutors still allege Storm knowingly took part in criminal activity, while the regulatory change recognizes lawful privacy use without resolving whether his software work crossed into crime.
Storm, posting as @rstormsf, cast the prospect of prison as punishment. According to Storm's post: "for writing code". He contrasted his case with Treasury's withdrawal, though the new filing concerns only where the case can be tried.
Why the venue fight hinges on a different mixer's case
SDNY prosecutors are relying on the D.C. Circuit's Sept. 25 decision in United States v. Sterlingov, a case involving Bitcoin Fog, a separate cryptocurrency mixer, citing its venue holdings as persuasive authority for Storm's challenge. Their argument centers on a Manhattan customer, Shakeeb Ahmed, whose deposits they say helped enlarge the anonymity pool and make funds harder to trace, even though the money stayed there only briefly.
Storm already holds an August 2025 conviction on one money-transmission conspiracy count carrying a statutory maximum of five years. An Aug. 25, 2026 court order scheduled his retrial for April 26, 2027, citing his pending acquittal motion.
Treasury's rule withdrawal does not reach the criminal case
Treasury's Financial Crimes Enforcement Network is withdrawing its 2023 finding and proposed enhanced reporting and recordkeeping measure for international cryptocurrency mixing. The withdrawal notice, filed Oct. 5 for Oct. 6 publication, cites concerns about a chilling effect on legitimate activity and burdens on financial institutions. FinCEN says it still retains monitoring for money laundering, terrorist financing and other illicit activity.
DOJ's own posture shows the same boundary. Deputy Attorney General Todd Blanche's April 7, 2025 memo directed prosecutors away from targeting mixers for their users' conduct or unwitting regulatory violations, but it expressly excludes conduct involving funds known to come from crime, leaving that category open to charges. DOJ official Matthew Galeotti later said, in August 2025 remarks, that protection against new charges applies only to software that is truly decentralized and leaves no third party with custody of user assets.
Trump's Jan. 21, 2025 pardon of Ross Ulbricht is a separate case of individual clemency that did not extend to Storm or set a general exemption for crypto developers.
Source: CryptoSlate
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