DoJ’s Tornado Cash Case Wobbles After Jury Hears Questionable Evidence

Roman Storm’s criminal trial in Manhattan is approaching a critical moment, with prosecutors expected to rest their case by Friday, July 25.

The Tornado Cash co-founder faces charges of conspiracy to commit money laundering, operating an unlicensed money-transmitting business, and violating U.S. sanctions for allegedly enabling transactions tied to North Korea’s Lazarus Group. He has pleaded not guilty.

The case is unfolding before U.S. District Judge Katherine Polk Failla in the Southern District of New York, where Storm remains free on $2 million bail, subject to electronic monitoring and travel restrictions. The trial began on July 14 with jury selection and opening statements and is expected to last until approximately mid-August.

The prosecution’s early strategy appeared to lean heavily on emotional testimony. One witness, a Georgia woman who reportedly lost roughly $250,000 in a pig-butchering scam, told jurors that she had been informed her stolen cryptocurrency ended up in Tornado Cash.

But the defense quickly pushed back, arguing that prosecutors lacked verifiable on-chain evidence directly linking the funds to the mixing protocol. Independent blockchain experts, including MetaMask’s head of security, Taylor Monahan, have also suggested that such scammers typically avoid Tornado Cash in favor of larger, more opaque laundering networks.

Objections Mount

The controversy deepened after the Department of Justice re-designated an IRS agent, Stephan George, as a tracing expert less than 48 hours before he testified.

George reportedly used a “Last In, First Out” method — common in tax accounting but debated for crypto tracing — following roughly 9.7 ETH of stolen funds belonging to the Georgia woman through about 10 wallets, concluding that the funds ended up in Tornado Cash.

According to courtroom reporting by journalist David Z. Morris, George admitted under cross-examination that his tracing didn’t prove the scammer personally sent funds to Tornado Cash. The judge left this uncertainty for the jury to assess.

Defense lawyers argued the move was a last-minute attempt to patch over weak evidence, noting that the DOJ already had a separate tracing expert who had not made these claims. They filed a motion to preclude George’s testimony, warning that the jury has now heard an emotionally charged account unsupported by blockchain data.

However, the judge denied the motion, ruling that any flaws in George’s methods could be challenged through cross-examination. She allowed him to testify that, using a “last-in, first-out” model, some of the victim’s funds “ultimately” reached Tornado Cash, while reminding jurors that the reliability of that analysis would be for them to judge.

Legal Experts Push Back

Judge Failla has reportedly limited what the defense can argue in court. While Storm’s lawyers are allowed to reference his motivations for creating a privacy-preserving tool, they are barred from making broader appeals to constitutional privacy rights or invoking crypto-related kidnappings that predate the August 2023 indictment.

Critics say the prosecution may be overreaching. Amanda Tuminelli, Chief Legal Officer at the DeFi Education Fund, suggested in an X post that the DOJ is pushing the limits of legal interpretation.

“This is the problem when the DOJ decides to get creative with a legal theory on something like 18 USC 1960 – the DOJ shoots an arrow and then paints the target around it, trying to fill in shoddy evidence after the fact,” she wrote.

Jake Chervinsky, Chief Legal Officer at Variant, also criticized the case, noting in an X post that the DOJ had “years to prepare for this, and so far their case is basically ‘crypto is bad!’ Their first witness had literally nothing to do with Roman or Tornado Cash.”

Storm’s legal team is expected to begin presenting its case by late July and may call Storm to testify.