Paradigm, a venture capital firm involved in crypto projects, has submitted a legal brief supporting Roman Storm, one of the co-founders of Tornado Cash.
The document was filed on June 13 in a New York federal court and argued that the jury must understand what the law meant by running a money-transfer business.
According to Paradigm, the prosecution needs to prove several specific points to find Storm guilty. These include showing that he charged fees, knowingly transferred funds for others, dealt with funds tied to illegal activity, and had actual control over the money passing through the service.
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The firm also referred to past guidance from the US Treasury’s Financial Crimes Enforcement Network (FinCEN).
In 2014, FinCEN stated that creating software does not count as handling or transferring value. Additionally, in 2019, Paradigm said full control over a user’s crypto holdings was an important factor when deciding whether someone was acting as a money transmitter.
Katie Biber, Paradigm’s chief legal officer, and Gina Moon, its general counsel, expanded on these arguments in a blog post published on June 17. They said the government’s case contradicts what the law clearly states, as well as long-standing regulatory guidance and past legal decisions.
They also warned that if the court allows this interpretation, it could give prosecutors too much freedom to apply criminal charges in ways that were never intended.
On June 5, several US crypto advocacy groups urged lawmakers to add clear protections for software developers and companies to the CLARITY Act. Why? Read the full story.
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