The US government can still retry Tornado Cash developer Roman Storm on counts of money laundering and violating sanctions due to a hung jury, according to attorneys.

“The Department of Justice (DOJ) will decide in the coming days if it wants to retry those charges in a new trial,” Jake Chervinsky, chief legal officer at venture capital firm Variant Fund, wrote on X.

Storm was convicted on one felony count for his involvement with Tornado Cash on Wednesday. The jury found him guilty of conspiracy to operate an unlicensed money transmitting business.

However, jury members did not reach a unanimous verdict on the charges of conspiracy to commit money laundering and conspiracy to violate North Korea sanctions.

Attorney Aaron Brogan told Cointelegraph that Storm’s verdict still carries broader legal implication for decentralized protocols.

“The problem with this broad application of federal money transmitter law is that, frankly, many in DeFi worry they could apply as strongly to them as to Tornado Cash. And while the government probably won’t bring charges against all of DeFi, the broad exposure gives them a powerful stick in any negotiations.”

The case’s potential for lasting implications has drawn close attention from the crypto industry and privacy advocates. Attorneys say the precedent-setting trial is critical for digital privacy and could have a significant impact on open-source software developers in the United States.

Related: SEC’s Peirce defends transaction privacy as Tornado Cash verdict looms

Attorneys react to the partial verdict

The US can still bring Roman Storm back to court on the unresolved charges of conspiracy to commit money laundering and conspiracy to violate North Korea sanctions. The decision would depend on several factors, including the likelihood of securing a conviction in a second trial.

“If the Trump administration wants the USA to be the crypto capital of the world, then the DOJ must not be allowed to retry the two deadlocked charges,” Chervinsky said.

Chervinsky described the partial verdict as “a sad day for DeFi,” warning that section 1960 under the US Code, which prosecutors used to charge Storm with operating an unlicensed money transmitting business, represents an existential threat to decentralized finance applications.

“All in all, this leads to a pretty depressing conclusion,” attorney Zack Shapiro wrote on X, but said that it was good the “draconian” prison sentences for the money laundering charges were off the table for now.

I think it’s reasonable to conclude that the government might not retry the mistried counts of money laundering given the political posturing

A US court overturned the Tornado Cash sanctions in January 2025, handing decentralized crypto and privacy-preserving protocols a major legal victory.

The sanctions were imposed by the US Office of Foreign Assets Control (OFAC) in 2022, accusing the crypto mixing service of money laundering.

DOJ officials claimed the Tornado Cash protocol helped launder over $7 billion in crypto between 2019 and 2022 and was instrumental to North Korean state-sanctioned hackers laundering funds stolen through hacking.

Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers

]]> https://earlybirdsinvest.com/us-doj-could-still-pursue-money-laundering-sanctions-charges-against-roman-storm/feed/ 0 51860 https://earlybirdsinvest.com/samourai-wallet-founders-plead-guilty-to-unlicensed-money-transmission-doj-drops-laundering-conspiracy-charges/ https://earlybirdsinvest.com/samourai-wallet-founders-plead-guilty-to-unlicensed-money-transmission-doj-drops-laundering-conspiracy-charges/#respond Fri, 01 Aug 2025 00:50:27 +0000 https://earlybirdsinvest.com/samourai-wallet-founders-plead-guilty-to-unlicensed-money-transmission-doj-drops-laundering-conspiracy-charges/

The developers behind Samourai Wallet pleaded guilty to a single count of conspiracy to operate an unlicensed money‑transmitting business.

The plea deal secures dismissal of the parallel money laundering conspiracy charge and caps potential prison time at five years. It also includes $237 million in forfeiture and a $400,000 fine.

As journalist Matthew Russell Lee reported on July 30, sentencing is set for November 6. Additionally, the defendants agreed not to appeal if the sentence is five years or less, according to Bitcoin Policy Institute’s head of policy, Zack Shapiro.

Plea deal

Lee reported that Judge Jed Rakoff pressed Keonne Rodriguez to state his criminal conduct “in his own words.”

Rodriguez told the court that his role at the firm meant that he was aware users were using the wallet “to launder criminals’ money.” Prosecutors argued that the knowledge alone is sufficient for a 60 month sentence even if they were not involved in the laundering.

Shapiro noted that had both counts gone to verdict, combined federal guidelines would have pointed to 160 to 210 months. By pleading to the unlicensed transmission conspiracy under 18 U.S.C. § 1960, the developers face a statutory maximum of five years rather than a potential decade-plus exposure.

Defense‑side reaction framed the outcome as a pragmatic hedge rather than a legal endorsement of the US Department of Justice’s (DOJ) theory.

Amanda Tuminelli, executive director and CLO at the DeFi Education Fund argued that the DOJ “misinterprets Section 1960 whenever they accuse a non‑custodial software dev of ‘transferring funds on behalf of the public,’”

Tuminelli added that the pleas don’t change the policy fight over how the law should apply to open‑source wallet software. She said:

“Plea deals are risk calculations.”

Case background

US and international authorities shuttered Samourai on April 24, seizing its domain and web infrastructure in collaboration with the Icelandic and Portuguese police, the IRS, the FBI, and Europol.

The authorities also issued a warrant that removed the Android app from Google Play for US users.

Prosecutors alleged founders Keonne Rodriguez and William Lonergan Hill ran a mixing service through Samourai that processed more than $2 billion in Bitcoin tied to illicit activity, including $100 million linked to dark‑web markets. 

The app, one of the best‑known privacy‑focused Bitcoin wallets, had been downloaded over 100,000 times.

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Amin Ayan

Crypto Journalist

Amin Ayan

About Author

Amin Ayan is a crypto journalist with over four years of experience in the industry. He has contributed to leading publications such as Cryptonews, Investing.com, 99Bitcoins, and 24/7 Wall St. He has…

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July 26, 2025

Dragonfly Capital may soon find itself in the crosshairs of U.S. prosecutors over its 2020 investment in Tornado Cash developer PepperSec, Inc., the firm behind the now-sanctioned crypto privacy protocol.

The venture capital firm signaled Friday that it would push back hard if formal charges are filed.

In a statement on social media, Dragonfly managing partner Haseeb Qureshi defended the investment, stressing that it was made in good faith after receiving legal assurances of compliance.

“We made this investment because we believe in the importance of open-source privacy-preserving technology,” Qureshi wrote. He added that legal counsel at the time found no regulatory red flags.

US Crackdown on Tornado Cash Sparks Crypto Privacy Debate

The controversy stems from the US government’s crackdown on Tornado Cash, a tool that enables users to obscure the origin and destination of crypto transactions.

Though the protocol was pitched as a decentralized privacy enhancer, it became a favorite among hackers and sanctioned entities seeking to hide digital footprints.

In 2023, the Department of Justice charged developers Roman Storm and Roman Semenov with money laundering and violating U.S. sanctions.

Storm’s trial is currently underway in New York and could result in a decades-long prison sentence. On Friday, prosecutors suggested Dragonfly itself could be next.

Qureshi dismissed the notion as an intimidation tactic. “We believe the government’s statement in court today was primarily to undermine a defense of Tornado Cash,” he said. “Bringing charges now would be outrageous.”

Tornado Cash has remained a legal and ethical flashpoint in the debate over privacy and regulation in crypto.

Its sanctioning by the U.S. Treasury’s OFAC in 2022 was a landmark moment, with authorities alleging it facilitated billions in illicit transactions, including funds tied to North Korean hackers.

Despite the sanctions, Tornado Cash has shown surprising resilience. Flipside Crypto reported $1.9 billion in deposits through the platform in the first half of 2024, indicating continued demand for anonymity tools in blockchain transactions.

No Final Ruling Needed After Tornado Cash Removed from Sanctions List

In March, the US Treasury Department argued that no further court ruling is necessary in the legal battle over its sanctioning of crypto mixer Tornado Cash, citing its recent removal of the platform and associated addresses from the sanctions list.

As reported, a developer has ported Tornado Cash to the MegaETH blockchain’s public testnet, enabling private transactions on the high-performance network.

MegaETH, which recently launched, boasts a throughput capacity of up to 20,000 transactions per second.

The developer, known pseudonymously as Gunboats, said the idea was sparked by the U.S. Treasury’s recent removal of Tornado Cash addresses from the OFAC sanctions list, following a court ruling earlier this year.

Venture capital firm Dragonfly said Friday that the U.S. government is weighing potential charges over its 2020 investment in PepperSec, the developer of Tornado Cash, marking a rare instance where federal prosecutors may target a venture investor for backing a crypto project.

In a detailed statement, Dragonfly managing partner Haseeb Qureshi called the prospect of such charges “outrageous” and legally unfounded.

He said the firm invested in PepperSec in August 2020 after securing an independent legal opinion that confirmed Tornado Cash, as designed, complied with federal guidance issued by the Financial Crimes Enforcement Network (FinCEN) in 2019.

Qureshi further stated that Dragonfly believed strongly in supporting open-source privacy-preserving technologies and continues to stand by that investment.

The development comes days after the prosecution faced a setback in developer Roman Storm’s trial after the FBI failed to connect funds stolen from a key witness to Tornado Cash.

Tornado Cash, launched in 2019, is a decentralized protocol that mixes cryptocurrency transactions to obscure sender and recipient details. The tool, while valued by privacy advocates, has been accused by U.S. authorities of facilitating money laundering for hacking groups, including North Korea’s Lazarus Group.

The Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in 2022, but subsequent court challenges forced the government to scale back certain aspects of its sanctions, a development Dragonfly cited as proof of the protocol’s legal standing.

Qureshi said that Dragonfly neither operated Tornado Cash nor had any contact with illicit users, emphasizing that it offered PepperSec the same level of guidance it provides to all portfolio companies.

He also revealed that the firm fully complied with a Department of Justice subpoena issued in 2023 and was told it is not a direct target of the ongoing investigation.

According to Qureshi, the government’s mention of Dragonfly during a recent court proceeding was an attempt to weaken Tornado Cash’s defense, potentially by complicating testimony from Dragonfly co-founder Tom Schmidt.

He argued that prosecuting an investor over the conduct of a portfolio company years after the fact would have a chilling effect on venture funding for privacy technologies and blockchain innovation.

Dragonfly’s statement comes amid heightened enforcement efforts against crypto privacy tools, which regulators view as a growing risk for illicit finance. The firm said it remains confident that the DOJ will not pursue charges, but it pledged to “vigorously defend” itself if necessary.

A Connecticut man involved with a massive theft of Bitcoin (BTC) from a Washington, D.C. victim reportedly pleaded guilty to fraud and money laundering conspiracy charges.

ABC News reports that Veer Chetal, who is among the three men charged with siphoning 4,100 BTC worth $243 million in an elaborate scam last August, also agreed to testify against his co-defendants, Malone Lam and Jeandiel Serrano.

Authorities say that the trio engaged in online social engineering attacks targeting cryptocurrency holders. Lam would send fake alerts to victims about unauthorized attempts to access their crypto accounts. Chetal and Serrano would then call and pose as representatives from companies like Google and Yahoo in an effort to access victims’ accounts.

Prosecutors say that Chetal, Lam and Serrano lived large after the heist, spending millions on cars, jewelry, rental mansions and nightclub parties.

But a week after the theft, Chetal’s parents were abducted in a botched ransom scheme. The suspects planned to demand payment from Chetal, believing he held large amounts of cryptocurrency.

But the abductors were arrested quickly after the police responded to eyewitness calls. An off-duty FBI agent also happened to be passing by just as the kidnapping unfolded.

Unsealed court documents also show that Chetal is being accused of playing a role in 50 similar heists that siphoned $3 million from victims between November 2023 and September 2024.

Chetal now faces up to 24 years in prison, a fine ranging from $50,000 to $500,000 and restitution to the victim.

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The Department of Justice (DOJ) has charged a Russian national and crypto executive with allegedly laundering more than $500 million worth of overseas payments through US banks and digital asset exchanges.

The DOJ alleges New York resident Iurii Gugnin used his crypto company, Evita, to move dirty money through the US for sanctioned Russian banks, which helped Russian individuals acquire sensitive US technology.

Gugnin, who also goes by the names Iurii Mashukov and George Goognin, allegedly had foreign customers who held assets in sanctioned Russian banks pay him in the top stablecoin, Tether’s USDT.

The DOJ says the crypto executive would then launder the USDT through digital asset wallets and US bank accounts, eventually converting it into dollars or other fiat currencies.

He then allegedly made payments through bank accounts in Manhattan on behalf of his foreign customers, obscuring the source of the funds and defrauding banks and exchanges in the process.

Gugnin, 38, was arrested in New York on Monday and charged with wire and bank fraud, conspiracy to defraud the United States, violation of the International Emergency Economic Powers Act (IEEPA), operating an unlicensed money transmitting business, failing to implement an effective anti-money laundering compliance program, failing to file suspicious activity reports, money laundering and related conspiracy charges.

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