In an oral statement issued on Thursday, Tornado Cash judge says code is not speech, non-custodial service providers can be money service businesses, and specific knowledge of criminal activity is not a prerequisite for charges of conspiracy to commit money laundering.

U.S. District Judge Katherine Polk Failla issued an oral ruling refusing to dismiss key charges against Tornado Cash developer Roman Storm, while making several consequential findings about software, money transmission, and money‑laundering conspiracy law. The ruling means the criminal case over Tornado Cash’s alleged role in laundering illicit funds will proceed to a jury trial rather than being thrown out at the pre‑trial stage. According to detailed accounts of the hearing, Failla rejected arguments that the charges were unconstitutional because they criminalize code writing or violate the First Amendment. She stated that the “functional capability of code is not speech within the meaning of the First Amendment,” distinguishing between the expressive aspect of software and its use as a tool, and aligning with government arguments that the laws at issue punish financial crimes, not coding itself. In addressing the unlicensed money transmitter charge under 18 U.S.C. § 1960 and related Bank Secrecy Act issues, Failla further held that a service provider can qualify as a money services business (MSB) even if it is non‑custodial and lacks full control over user funds, rejecting the defense position that control is a required element for money‑transmission liability. She emphasized that neither Section 1960 nor FinCEN’s 2019 guidance imposes a general “control” requirement for money transmission, and that any such control language is confined to a specific wallet‑related test that does not apply to mixers like Tornado Cash. On the money‑laundering conspiracy counts, Failla also sided with the prosecution’s mens rea theory. Summarizing the standard, she reportedly stated that to be guilty of money laundering, a defendant need not know the specific underlying crime that produced the illicit proceeds, but must know they are dealing with the proceeds of “some crime.” She characterized Storm’s conduct as alleged laundering via the Tornado Cash service rather than the mere export or publication of Tornado Cash software, and said the laws at issue do not punish coding as such but the financial activities carried out through the service. The combination of these findings—code not treated as protected speech in its functional use, non‑custodial operators potentially deemed MSBs, and no requirement of specific knowledge of the predicate offense—signals a broad theory of liability that could have far‑reaching implications for crypto privacy tools, open‑source developers, and non‑custodial service operators facing U.S. regulatory and criminal enforcement.

✨ AI-generated background, compiled from web sources — not editorial content.

More coverage

• Tornado Cash Is Not Free Speech. It's a Golem - Lawfare (lawfaremedia.org)
• Code, Speech, and the Tornado Cash Mixer (eff.org)
• [PDF] Van Loon - United States Court of Appeals for the Fifth Circuit (ca5.uscourts.gov)
• Tornado Cash: Where Code, Privacy, and Sanctions Collide (btcpolicy.org)
• An Update on Tornado Cash | Hacker News (news.ycombinator.com)

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