The high-profile trial against Tornado Cash developer Roman Storm is taking a dramatic twist as key witnesses face pressure from prosecutors.
(Source: Eleanor Terrett on X)
According to Storm’s defense attorney Brian Klein, a custodian from Chainalysis is expected to testify tomorrow as the case enters in third week after the Chainalysis custodian abruptly decided to invoke the Fifth Amendment to avoid self-incrimination.
According to Storm’s defense attorney, the Chainalysis witness, originally expected to testify, changed course after a phone call with the government. The defense has now demanded that the court investigate what prosecutors said during that call, calling the reversal “out of the blue.”
This comes just days after the Southern District of New York (SDNY) allegedly threatened Dragonfly Capital’s Tom Schmidt, a potential defense witness, with prosecution. Dragonfly’s Managing Partner Haseeb Qureshi slammed this aggression as an attempt to “undermine Tornado Cash’s defense.”
Chainalysis’s Role in the Tornado Cash Case
The US government’s case against Tornado Cash relies heavily on Chainalysis, though the firm’s role is now facing fierce challenge in court.
Prosecutors have leaned on Chainalysis’ Reactor software to tie Tornado Cash to alleged money laundering, including transactions linked to North Korea’s Lazarus Group. IRS Special Agent Stephan George testified by citing the blockchain analytics firm’s data to claim Storm controlled funds entering Tornado Cash’s privacy tools.
Yet the defense has struck back, raising questions on the accuracy of the software’s methods, particularly on its “Last In, First Out” (LIFO) accounting. They argue that this method creates unreliable transaction trails.
The clash is expected to escalate after a Chainalysis witness suddenly invoked the Fifth Amendment on July 28, refusing to testify after a reported call with the DOJ. This event has sparked another controversy and raised questions about prosecutorial pressure.
Surprisingly, the defense mentioned that Chainalysis, a blockchain analytics firm often used by law enforcement, reportedly operated its own Tornado Cash relayer. This directly contradicts the prosecution’s argument that Storm conspired not only with his alleged co-defendants but also with relayers facilitating the service.
If the government’s logic holds, the defense argues, then Chainalysis itself could be implicated in the same conspiracy charges, such as evading sanctions and laundering illicit funds.
Tomorrow’s hearing could influence the court’s ruling, as a verdict is expected around August 11.
Storm is facing charges of conspiracy to commit money laundering, evade sanctions, and operating an unlicensed money-transmitting business, with a potential 45-year sentence if convicted.
However, Storm’s defense and DeFi supporters argue that Tornado Cash is a decentralized, immutable protocol and that prosecuting Storm criminalizes open-source code, violating First Amendment protections.
As the defense presents its case, witnesses like Ethereum developer Preston Van Loon have testified that Tornado Cash was designed as a privacy tool, not a money-laundering service.
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