Is Privacy Legal? Roman Storm’s Defense Rests in Tornado Cash Trial
Final witnesses laid out principles of decentralization and the critical role of privacy online.
The defense rested on Tuesday, July 29 in the criminal trial of Roman Storm, co-creator of the privacy protocol Tornado Cash. Storm chose not to testify in his own defense.
Storm’s final witnesses included an investor who praised Tornado cash’s service but didn’t think it would make money, and another investor who used the service personally to keep his portfolio private. The final witnesses were Dr. Stephanie Hurder, an economist and mechanism designer who discussed the power held by the Tornado Cash DAO, and Dr. Matthew Green, a Computer Science professor at Johns Hopkins and one of the technologists behind Zcash, who laid out the rationale for privacy services of all sorts.
A record custodian from Chainalysis, which was meant to testify to a Tornado Cash relayer the firm operated, did not take the stand as the documents were not entered into evidence. Andrew Thurman, who authored a seemingly misattributed Telegram message forwarded by Tornado Cash developer Alexey Pertsev, did also not take the stand.
Storm’s trial is very likely to conclude within the next two days. On Wednesday, both sides will present their closing arguments, and the jury will begin deliberation.
Sage D. Young
“I wouldn’t say the store was used in crime.”
Before the experts, we got short but very punchy testimony from Guy Wuollet of a16z crypto, who declined to invest in Tornado Cash not because of compliance concerns, but because they didn’t see enough value accrual to the TORN token. A letter dated March 12, 2022 was offered as evidence. It was very complimentary and admiring towards Tornado Cash, expressing that a16z was “excited about the next iteration of the protocol.
When Wuollet was asked by the defense if he really “meant” all the positivity, he said he had.
Wuollet’s cross-examination featured a rare moment of snappy dialogue in a trial that has been, for those of us watching it closely, mired in both technical minutiae and Kafkaesque legal maneuvering. After naming a series of hacks, including the Ronin hack near the center of the charges against Storm, the prosecution pressed Wuollet to confirm that “Crypto is used in crime, yes?”
Wuollet answered that he disagreed, saying he didn’t think these were good examples of crypto being used in hacks. They were more like “a crime committed on the blockchain … if someone robbed a store, I wouldn’t say the store was used in crime.” The jury, and others, had a badly needed laugh,
The jury also heard brief morning testimony from investor and consultant Omid Malekan, who testified to using Tornado Cash to buy a .ETH domain without exposing wallets from which he invests.
Malekan was about to testify that he “didn’t want a bullseye on my back,” when prosecution objected to the language. Instances or suggestions of physical violence as a risk of privacy compromise have been fought by the prosecution at every turn, apparently including as metaphors. Judge Failla showed a rare flash of anger, demanding that the defense “control your witness.”
Experts in Decentralization
Dr. Stephanie Hurder of Prism Group gave expert testimony to the tokenomic design around the TORN token, and its role in granting a collective governance DAO what she called “significant power.”
She also testified that “the Ronin hack did not benefit the price of the TORN token,” an indirect rebuttal of the govt’s claim that Storm was motivated to collaborate in crime out of greed. Hurder’s price analysis showed that news of the Ronin hack drove the Tornado Cash token price down 19% relative to ETH and BTC - not exactly great for the founders.
Hurder also described principles and practice of decentralization, including, in so many words, the idea of progressive decentralization – founders who give up control over time. Much groundwork has been laid by both sides of the case on the question of who controlled, in particular, the update of relayers connecting front-end interfaces to on-chain contracts. But this key issue of Roman Storm’s actual material responsibility has been largely opaque so far, and a lot could hinge on what both sides make of it in closing arguments.
Hurder also walked through the funding history of Tornado Cash, which began in 2019 with funding via Gitcoin to the princely tune of $5,500 dollars (it was, after all, 2019). She also testified that Peppersec did not earn any ongoing revenue from Tornado Cash. She characterized a 55% allocation of tokens to the DAO/community as “quite a bit.”
Jurors might mark this against the prosecution’s attempts to establish criminal greed as a primary motivation for the charges of money laundering, sanctions violations, and [insert modified 1960 charge here] against Roman Storm. Like a tiny neon sign paraded around like Scarface loot by prosecutors last week, the funding described by Hurder was less “money laundering overlord” and more “ramen three times a week.”
Overall, the defense presented Tornado Cash convincingly as more or less a ‘normal’ tech startup. The prosecution’s cross-examination of Hurder was clumsy and aimless by contrast, with AUSA Arad making several misstatements of terminology that led Hurder to dead ends.
David Z. Morris
Privacy is Normal
Between witnesses, a short hearing led to the exclusion of video of a hackathon from ETH Boston 2019 where Tornado Cash was first piloted. In the video, Roman Storm could be seen wearing a Tornado Cash t-shirt bearing a “washing machine” logo, a clear (if sardonic) reference to money laundering that is one of the prosecution’s few bits of evidence of criminal intent. The video was submitted as evidence to Storm’s non-criminal state of mind – this was a major event - but ruled immaterial by Judge Failla.
This was followed by testimony from Dr. Matthew Green, a Johns Hopkins computer science researcher and one of the technologists behind Zcash. Green is a professor at Johns Hopkins who has worked on multiple DARPA cybersecurity grants and helped design Zcash, work for which he won an IEEE award. Green would be the final in-depth witness of the day, and the trial.
Green laid out basic principles of online encryption and privacy, including the broad prevalence of encryption in web browsing and messaging. The defense were essentially allowed to make the argument that Tornado Cash is a parallel technology to WhatsApp or even an encrypted web browser, but for money.
This extended to Green laying out the cybersecurity and privacy risk of customer information held by banks, and the likelihood that financial information could make people targets for phishing, hacking, fraud, and “physical extortion.” Evidence included a 2018 New York Times article about crypto kidnappings. The prosecution has resisted the presentation of evidence or testimony about physical harm risks in connection with financial privacy.
“Are the node operators on the Ethereum network helping run Tornado Cash?” the defense asked Green in an exchange that emphasized the broader risks implied by Storm’s prosecution. “Yes,” Green replied.
Green also helped the defense walk through the key issue of the user interface, though he was blocked from offering opinions about prosecution witness Philip Werlau’s proposal for a ‘compliant’ Tornado Cash using a central user registry. The prosecution’s cross examination of Green by Ben Arad was again, at best, perfunctory.
“This is not a joke. We need to do it fast.”
And that was pretty much the ballgame. One final summary witness was a court officer who helped read evidence into the record, including messages confirming contemporaneously that Tornado Cash was not collecting user IP addresses – which the defense has also established is common among blockchain applications.
Also brought in were full chat exchanges between Roman Storm and his team in the immediate wake of the Ronin hack, when he appeared frantic to implement an OFAC sanctions oracle on the front-end his team controlled.
“This is not a joke. We need to do it fast,” Storm implored. It had the very clear tenor of an entrepreneur in a crisis, rather than a criminal achieving his long-held ambition of profiting from decentralized money laundering.
Tomorrow, July 30 will see closing statements from the prosecution and defense. Following the reading of the charges, the jury is likely to begin deliberation after lunch, and may very well deliver a verdict before the end of the day.
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