Failla: Custody Issue Not Important To Storm's Defense
"You haven't persuaded me that the custody issue is as important as you say," judge Failla stated, opining that senior FinCEN employee's views were non-exculpatory.
In a phone conference discussing the issues in the criminal case against Tornado Cash developer Roman Storm following the disclosure of senior FinCEN official employee's views that the non-custodial Bitcoin wallet Samourai Wallet likely did not qualify as a money service business, judge Failla stated that she does not know "that those views of two senior people at FinCEN matter."
Storm's defense had attempted to persuade Failla on the fact that Storm believed to have acted in compliance with the law, if even senior FinCEN employees do not believe that non-custodial wallets qualify as money service businesses.
Prosecutors for the Southern District of New York disclosed that they had only been made aware of FinCEN's opinions with the disclosures made in the Samourai Wallet case, although a supervising SDNY employee, who oversees both cases, had been aware of FinCEN's opinion on the issue since August 2023.
The call was intended to discuss a potential Brady violation if Storm's prosecution had failed to disclose similar communications with FinCEN in the case against Storm, whereas SDNY argued that it had no materials in their possession in which FinCEN shared their views on whether Tornado Cash complied with FinCEN guidance – "we never saw or obtained any such views," and "there was no effort to obtain such an opinion from FinCEN on whether Tornado Cash had registration obligations."
Failla stated that, even if the Government was in possession of such communications, she does not believe that such material would be exculpatory to Storm's defense, and therefore qualify as Brady.
"You havent persuaded me that the custody issue is as important as you say," Failla stated.
Failla's reasoning is in line with an oral opinion she issued last September, in which she argued that non-custodial software providers can be classified as money service businesses, stating that "a control requirement is not in the statute and this court is not going to read it in."
Since the Government has dropped charges for federal money transmission licensing violations under 18 U.S.C. 1960(B)(1)(b), the defense appears to rightfully ask who exactly Storm should have registered with, noting that Storm continues to be charged with unlicensed money transmission under 18 U.S.C. §1960(B)(1)(c), governing the transmission of illicit proceeds.
"The word license doesnt apply here," the Government responded. "There's no available license to move criminal proceeds, and the jury wont be instructed that there's any licensing issues at stake."
Instead, the Government aims to prove that Storm transmitted illicit proceeds, apparently arguing that the subsection violation they are charging him with can stand independently of the overreaching statute to which the section belongs.
The court agreed to move motions scheduled for June 4th and June 13th to June 6th and June 16th, respectively.
The information in this article is taken from notes and recollection. An official transcript will be made public when available.
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