"This Is Not How The First Amendment Works" Storm Defense Tells SDNY
The Tornado Cash developer continues to seek acquittal on all counts in a case that would chill "any innovation touching privacy."
There are many things that make the prosecution of Tornado Cash developer Roman Storm relevant to cryptocurrency services beyond privacy tools: from blurring the lines between custodial and non-custodial services to attempting to hold software developers accountable under the International Economic Emergency Powers Act (IEEPA).
But the case also has major implications for the writing of free software overall, which, under court's ruling in Bernstein v. US, constitutes a form of free speech under the First Amendment.
The Defense's latest motion for Roman Storm's acquittal is a stark reminder for what is at stake: if Roman Storm loses this case, it could set the legal landscape regarding the development of free software back for decades, and undo many of the wins the cypherpunks had fought for in the early 1990s.
L0la L33tz
A Potential 30-Year Set Back
In pretrial proceedings, judge Failla cited a ruling that made a distinction between speech that is functional and speech that is expressive – a line of argumentation that the Government is now continuing, claiming that Storm should not be afforded First Amendment protections because his speech actually does something.
It's a question that is central to Storm's First Amendment defense: can people, or can they not, be held criminally liable for the words they write, even if such words may be misused by bad actors?
To better grasp the implications of such argumentation for the broader software development space, imagine Linus Torvalds being held accountable for entering into a criminal conspiracy with North Korea because most high-powered computer networks in the world, which likely includes those in North Korea, continue to run on Linux; Google being held accountable for Lazarus hackers who may use Chrome; or WhatsApp being held accountable when criminals use it, as judge Failla pondered herself earlier in the proceedings.
"The government asks this Court to disregard the expressive conduct identified by Mr. Storm," the defense now states, noting that "this is not how the First Amendment works," as software always performs a function.
L0la L33tz
Just Don't Write Privacy Services
As the prosecution argued in its latest motion against Storm's acquittal, Storm could have just build a different service to avoid criminal charges: namely, a service that has the ability to identify users and block transactions.
The prosecution bases this claim on the argument that if Storm were to be allowed to write software the way he did, "the President could not regulate banks and payment processors," the defense paraphrases the Government, even though these entities are highly regulated by Congress and the states, are subject to myriad anti-money laundering regulations, and have robust sanctions compliance regimes – "Nor does the government explain why a software developer like Mr. Storm should be regulated like a bank or a payment processor."
"The trial record here did not live up to the government’s accusations of willful criminal conduct. Instead, the trial record amounted to could have’s and should have’s—a negligence theory."
At a minimum, the Government is attempting to indirectly "reduce or eliminate use of the Tornado Cash software", while no court has held that software is not informational material, the defense adds.
The dismissal of all three charges against Storm is therefore appropriate under the First Amendment according to the defense, as the burden on Storm’s speech is more than what is necessary to further the Government’s interest, "as it has the effect of chilling any innovation touching privacy."
L0la L33tz
Roman Storm Is Not A Money Launderer
The defense concludes that the Government's "'substantial interests' in prosecuting money launderers and sanctions evaders" are "true but irrelevant."
"Mr. Storm is neither, and the undisputed evidence showed he was not the one who used Tornado Cash to launder cryptocurrency or transact with sanctioned entities like the Lazarus Group."
As the outcomes of similar cases show, it appears indeed that the US Government rather takes issue with the development of privacy tools than with the violation of anti-money laundering and sanctions laws.
For comparison, Binance founder Changpeng "CZ" Zhao received a mere four months sentence for allegedly allowing entities like Hamas to transact on his platform, while the custodial exchange Paxful just recently agreed to pay a $4 Million criminal fine for allegedly conducting transactions linked to North Korea.
As the Fifth Circuit noted in the sanctions case against the Tornado Cash software, if the US Government wants to prohibit the use of software like Tornado Cash, it must do so via Congress – and not by reinterpretation of the law.
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