OK - now in US v. Roman Storm, closing arguments Unsealing bid in Inner City Press put out book on the case, Crypto Tornado & will live tweet, thread below
[After yet another sidebar, Storm's lawyer Axel is talking to the prosecutors. At defense table, Klein tells Patton (who's doing the closing), No pressure. They laugh.
Still waiting for kick-off
9:35 am
Jury entering!
Judge: We begin with the Government.
AUSA Gianforti: You have had a front row seat to the world of international crime. Roman Storm knew what he was doing and he made millions of dollars. He found the real money was not in privacy but crime
AUSA Ben Gianforti: When he learned the FBI knew, here's what he said: Guy's we're fucking done for. He ran Tornado Cash as a money laundering business. He profited handsomely from it. It was like a laundry, mixing dirty money with clean. Look at his T-shirt
AUSA: Can you imagine a better way to advertise a money laundering business than a T-shirt with a washing machine? They may say it is a joke. Nothing is funny about money laundering. Isn't anonymity another reason for concealment?
AUSA: Special Agent DeCapua showed you $1 billion in dirty crypto went through Tornado Cash. And Storm knew, including about the North Korea hackers. You saw chats, he was told. He knew it was wrong. Why did he say he was "done for"? He was about to get caught
AUSA: He is charged with conspiracies, three counts. He may claim he wasn't doing anything wrong, he wasn't working with the hackers like the Lazarus Group. But we don't have to prove that. He conspired with Semenov and Pertsev.
AUSA: Count 1 is about conspiracy for hiding dirty money. Count 2 is about conspiracy to run an illegal money transmitting business. And Count 3 is conspiracy to violate sanctions on North Korea and the Lazarus Group. This is from August 2020 to August 2022
AUSA: In August 2020 they get $900,000 from Dragonfly, their main funder. Then there's the KuCoin hack and laundering. They issue TORN, set up the relayers. Then there's the Ronin hack. In June 2022, the defendant is cashing out his TORN, splitting it up 3 ways
AUSA: After the Ronin hack, Storm doesn't know who did it. Then OFAC sanctions that Lazarus wallet. How would you launder that amount of cash? But with Tornado Cash it was easy. So hackers went there again and again. Agent DeCapua is an expert on this
AUSA: For a time - 11 days - proceeds from the KuCoin hack made up 61% of the Eth in Tornado Cash. Then there was BitMart. It made up 54% of the Eth deposits in Tornado Cash. Then the pivotal Ronin hack. Things got very real very fast for the defendant
AUSA: Tornado Cash transferred over $350 million from the OFAC sanctioned Lazarus wallet AFTER the sanctions were announced. In a four week period, the dirty money made up 55% of the Eth deposits in the defendant's business
AUSA: The other 50% is not necessarily - like the scam on Ms. Lin that you heard about. When you put it all together, there is no dispute: Tornado Cash processed criminal money. The 100 Eth transactions - these were the North Korean hackers, not regular people
AUSA: You heard from Andre Llacuna of the Frosties NFT scam. He didn't deliver the NFT, straight forward crime. Here are the Frosties characters on the screen. They decided Tornado Cash was the best place to hide the money and get away with it.
AUSA: Mr. Llacuna told his girlfriend he would use Tornado Cash. She wrote back, Washie washie. It doesn't get much clearer than that. You heard from Shakeeb Ahmed. He put Eth through Tornado Cash to initiate the Crema hack - to launder his gas fees
AUSA: Shakeeb Ahmed used Tornado Cash because North Korea's Lazarus did - as if he wanted to play basketball like Michael Jordan. He went to Tornado Cash because it didn't require personal info. Privacy for criminals
AUSA: Ms. Lin? You learned that some of her $250,000 got stolen and deposited in Tornado Cash. In April 2020 she sent an email to hello at tornado dot cash. It's the address the defendant used to run the business. Here's an invoice from Infura
AUSA: Roman Storm was informed, by email and by Direct Messages to his Twitter account. He wrote he wanted to change the script so Tornado Cash was not seen as entirely about helping bad guys. Back to Ronin - all the threads of the case come together
AUSA Gianforti: If it became known that they had control over Tornado Cash, hackers would stop using it. Dragonfly's Haseeb Qureshi, the quotes we showed you admitted it
AUSA: This cash out was just a dry run for the big one in August 2022. They used Binance. Each of the co-founders cleared over $2.6 million. And just like that, the defendant cashed out of the Tornado Cash business
AUSA: Here the defendant and Semenov are arguing about the business. It had customers. Here the defendant complains to Infura about a service outage impacting his quote unquote customers - that is, hackers...
AUSA: Are venture capital firms involved in charity? They are not. You heard from a16z. Again, the T-shirt with the machine machine on it. Semenov's shirt said, I keep my Ether clean with Tornado Cash. It was a business that he controlled. CEOs tend to control
AUSA: Tom Schmidt received messages in Manhattan... that exchange is in furtherance of the conspiracy. Also, Shakeeb Ahmed hacked from his apartment in Manhattan. I'm about to sit down. This is a simple story. Tornado Cash was a fancy online money launderer
AUSA: The business was privacy for criminals. I urge you to use your common sense. Roman Storm is guilty. Thank you.
Judge: We'll break before the defense summation by Mr. Patton.
Storm's lawyer Patton: The prosecution went over the line, talking about cashing out. That was because of the sanctions that we are not allowed to refer to. I'd ask for a mistrial
Judge: The motion for a mistrial is denied.
11:51 am
Judge: Mr. Patton, you may begin.
Storm's lawyer Patton: The Government has this wrong. Roman Storm did not want hackers using Tornado Cash. They destroyed his project. I will admit, I am not used to being surprised by closing - but this was upside down
Patton: The story begin at the Harvard conference in 2019. Roman and his friends went. Firms invested - it ws developed in the opening, open source, on GitHub, for a very legitimate purpose. To assure some privacy on the blockchain
Patton: The point of Tornado Cash was, You don't have to trust us as the developers. We don't have access to your data. We don't know what it is.
Many products useful to us are also useful to criminals: like cell phones, useful features, encryption
Patton: It is not enough to know that criminals use the product. You have to intentionally help criminals. Roman's intent was entirely the opposite. From the US closing you'd think knowledge is all that's needed.
Storm's lawyer Patton: This is not a civil negligence case. There has to be willful intent, for good reasons. They are changing course. I barely heard about Mr. Wuollet. Their theory had been to show Roman acted intentionally because he could have changed it
Storm's lawyer: When they found out the North Koreans use it, they did not celebrate. They dropped F-bombs. This trial is not about what the law should be. I'm sure we all have different thoughts about crypto currency and the value of privacy
Patton: I saw an ad for Snickers, a robber suggests the other eat a Snickers to be a better bank robber. It's a joke, like the T-shirt. The Government witness from Injura? He said Tornado Cash was exciting, for privacy in Ethereum.
Storm's lawyer Patton: By May 2020 the smart contracts were immutable. They got the Dragonfly investment to Peppersec. That's the company Roman was actually the CEO of. Tornado Cash was on their own project. Then the DAO and the TORN tokens
Storm's lawyer: The founders believed in decentralization. That was the ethos: no one big corporation is making decisions about your data. The promise of defi was against problems in banking: fees, exclusion
Storm's lawyer: Think about what Roman is hearing: one legitimate venture capital firm invests, and another says, we are a fan. This is not happening in a back alley. Mr. Werlau, we didn't hear much - maybe in the rebuttal. They get to go again
Storm's lawyer: Mr. Werlau said, you could keep a data base off-chain linking deposits and withdrawals. But that's not what Tornado Cash is about! He used as examples Gmail and Spotify. This is his idea of a privacy protocol? Maybe some of you are OK with this
Storm's lawyer: Maybe there are some upsides to Spotify tracking you. But Tornado Cash chose to not take your data, not take custody of your money. Look at Pertsev's phone - wouldn't they have said, We're rolling in it with the Ronin hack? They didn't
Storm's lawyer: They were upset about the hackers - they brainstormed how to deal with it. Roman forwarded an idea on how to stop hackers. They didn't do it, but these are not the discussions of people who want more hackers. Here's one, That's fucking crazy
Storm's lawyer: So they didn't solve the wack-a-mole problem. You can't solve the wack-a-mole problem. There was no panacea. If you're going to have a privacy protocol, that's part of it. But Werlau saying, Track user info is like telling Apple to stop encrypting
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