Prosecutors in the Roman Storm financial case are facing a critical test of their compliance with Brady obligations as they attempt to dismiss the importance of a FinCEN opinion that could significantly bolster Storm’s defense.
Prosecutors in the case against Tornado Cash developer Roman Storm are attempting to sidestep the possibility that a New York judge forces them to hand over additional evidence that could help Storm’s case. The debate centers around whether prosecutors failed to meet their Brady obligations by not sharing a FinCEN conversation tied to a related case.
The Samourai Wallet Connection
At the heart of the debate is a recent production of evidence in another case in the Southern District of New York (SDNY): the legal pursuit of Samourai Wallet co-founders Keonne Rodriguez and William Lonergan Hill. Both cases involve a crypto mixing service that prosecutors allege was knowingly used to launder crime proceeds. In the Samourai Wallet case, however, prosecutors recently admitted to having a conversation with two Financial Crimes Enforcement Network (FinCEN) officials in 2023 — before pressing charges — in which the government employees said they didn’t believe the mixing service would qualify as a money transmitting business under their guidelines and didn’t need a license to operate.
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Lawyers for Rodriguez and Hill accused prosecutors of suppressing critical evidence and violating their right to due process. Last week, the judge overseeing the case denied their motion for a hearing on the matter, telling them instead to include their concerns in their pre-trial motion due at the end of the month. Though the cases are separate, lawyers for Roman Storm expressed concern that the prosecution’s failure to inform them of their communications with FinCEN regarding Samourai Wallet’s status as a money transmitting business also potentially constituted a Brady violation in Storm’s case.
Prosecutors Push Back
In response to these concerns, prosecutors said that the FinCEN conversation wasn’t evidence, but an opinion, not a fact. They stated that therefore it was not required to be turned over to the defense. Prosecutors also claimed that their discussion with FinCEN was irrelevant to Storm’s case, because it wasn’t specifically about Tornado Cash.
The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury.
FinCEN was established in 1990 to combat money laundering and other financial crimes.
The network collects, analyzes, and disseminates financial intelligence to law enforcement agencies.
FinCEN requires financial institutions to report suspicious transactions and maintains a database of financial information.
According to FinCEN's annual reports, the number of reported suspicious activity reports (SARs) has increased significantly over the years, indicating a growing concern for financial crimes.
Key Points
Prosecutors claim that they didn’t have similar conversations with FinCEN about Tornado Cash, saying that there were “no such interactions comparable to those described in the Rodriguez Disclosures.” They also argued that any opinion from a FinCEN employee would not be legally admissible and would not constitute Brady material. The case against Storm is expected to begin on July 14 in New York.
The debate over whether prosecutors met their Brady obligations raises significant questions about the handling of evidence in cryptocurrency cases. As the trial approaches, it remains to be seen how this issue will play out in court.
Cryptocurrencies have been involved in several high-profile cases, including hacks and scams.
In 2014, the Mt. Gox exchange was hacked, resulting in the loss of over 850,000 Bitcoins.
The Silk Road online black market was shut down in 2013 after being linked to Bitcoin transactions.
In 2020, the BitMEX cryptocurrency exchange was fined $100 million by US regulators for violating anti-money laundering laws.
These cases highlight the need for stricter regulations and security measures in the cryptocurrency industry.
