Today, the Southern District of New York (SDNY) held a final status meeting hearing in the tornado cash case, a trial that begins this Monday, July 14th.
The hearing was essentially held, with attendees including Judge Katherine Polk Failla (the judge who presides the trial), Roman Storm, co-founder of Tornado Cash, and members of the defense and prosecutors.
Storm faces three accusations. It is a conspiracy to commit money laundering, a conspiracy to run an unlicensed remittance business, or a conspiracy to commit a sanction.
The main topics discussed at the hearing include:
- The basis for the New York State Court to become the venue for the trial
- The impact of the storm Bloomberg Reporter who reported Tornado Cash in March 2020
- Whether or not all actions by Tornado Cash Cofounders and developers continue to carry out Tornado Cash has facilitated the conspiracy in the prosecution of Storm
- Tolerance of data extracted from phones by Alexey Pertsev, co-founder of Tornado Cash
- How Judge Fila plans to focus more on how Storm runs his for-profit business than on details of Tornado Cache’s encryption mixing software.
Before engaged in these topics, Judge Phila shared some important details regarding the minutes of the trial.
Trial details
The trial begins at 9:30am EST on Monday morning, with one of the first items on the docket being a ju apprentice’s choice.
Judge Phila noted that the trial will not be recorded, broadcast or rebroadcast. (I’m there to cover most, if not all, of it!)
She also hopes to see the trial close within three weeks, but she doesn’t think it will, and she may need to take a little break from trial to celebrate her sick mother’s birthday.
Additionally, Judge Phila said no opening statement would be made until Tuesday, July 15th.
Why Tornado Cash Trials are being held in SDNY
Prosecutors say the trial is underway in SDNY as Storm operated a website that promotes tornado cash transactions from New York City for a period of time.
Prosecutors alleged that Storm also funded tornado cash and frequently communicated with one of the then-New York City-based venture capital (VC) principals.
Prosecutors added that Storm frequently requests from the VC principal, and that the requests are not merely related to fundraising.
Storm “fix” a Bloomberg Reporter
Prosecutors explained how Storm contacted him in March 2020. Bloomberg The reporter who wrote a story about Tornado cash would have the reporter change the story so that the authorities would not recognize Tornado cash from a negative standpoint.
They allegedly said that Storm spoke to reporters and that the persuasive reporter described the story as “inaccurate the story.”
The defense retreated and Storm said he had contacted reporters only to ensure that “appropriate modifications” had been made to the story.
Storm did not discuss the issue at the hearing.
Promote all the recharged plots?
Prosecutors have brought to the notion that all the efforts Storm and his co-founders made in running a for-profit organization that utilized tornado cash technology further promoted all the conspiracy that Storm was indicted.
One of the efforts cited by the prosecutors was Storm and his co-founder, encouraging US-based Tornado Cash users to use the service, which led to North Korean hackers creating a larger pool of capital for money mixed with software (which makes it easier to anonymize funds).
When the prosecutors made this argument, the judge pushed back and asked the prosecutor to clarify whether he believed the tornado cash co-founder to lift the business and promoted the accused conspiracy.
This put the prosecutors on pause, and at this moment one of the defense counsels moved to dismiss the charges against Arashi due to a lack of venue.
The judge quickly denied the move before claiming that such a request had made her very annoyed, which made her “run off in a hive.”
Graykey Progress Report
Throughout the hearing, Judge Phila raised a Graykey Data extraction from Alexey Pertsev’s phone. (Peltsev was sentenced to five years in the Netherlands for his involvement in tornado cash.)
Heading into the second half of the hearing, she asked both the prosecutor and the defense if they had any questions about Pertsev’s phone, then raised questions about whether the data extracted from Pertsev’s phone was acceptable. She decided to postpone the decision on the matter until trial.
She then requested that both the prosecutor and the defense review the data in question and the process it was obtained and be prepared to address the issue during trial.
Focus on the front end
It was clear that Judge Phila would at least focus on tornado cash as a mixing service, not on the front-end interface, a website created by Storm to facilitate transactions through Tornado Cash software.
“(We’re not going to think about a mix of encryption,” the judge said.
However, she said she was waiting for a response from the defense to what she wrote.
Witness and movement In Limin
Aside from the above issues, attendees at the hearing discussed the case’s witnesses and supplementary movements. In Limin (Not publicly disclosed before or during trial because it is irrelevant, prejudiced or unacceptable).
However, the witness’s name was not disclosed at the hearing, but prosecutors said “Withdate #1” had recently been identified and interviewed the witness.
The judge granted the request for defense to rule out certain material related to Witness #1.
Multiple movements In Limin It was discussed. During this part of the hearing, the judge told the prosecutor that he should not do anything like discussing the emotional stress that witnesses endured from having funds that frozen tornado cash.
Instead, she said she prefers witnesses who are victims who freeze funds, whether they reach out to the tornado cash team or not to have their funds frozen.
It was not discussed
During today’s hearing, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has not removed tornado cash from the sanctions list, nor the court recently deleted a Coincenter’s appeal to OFAC on the issue.
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