Regulators in the U.S. are sending mixed signals in the case against Roman Storm after the Tornado Cash co-founder pointed out that DOJ prosecutors were still after him despite the Treasury D
Regulators in the U.S. are sending mixed signals in the case against Roman Storm after the Tornado Cash co-founder pointed out that DOJ prosecutors were still after him despite the Treasury Department’s Financial Crimes Enforcement Network withdrawing from the planned crackdown on cryptocurrency mixers.
Within a day of the withdrawal, federal prosecutors in the Southern District of New York (SDNY) in Manhattan advanced new arguments to keep their case against Storm in the courts.
A Tuesday notice posted to the Federal Register’s public inspection site and signed by Financial Crimes Enforcement Network (FinCEN) Deputy Director Jimmy L. Kirby confirms that the regulator is moving on from the 2023 proposal to define international convertible virtual currency (CVC) mixing as a “class of transactions of primary money laundering concern” under Section 311 of the USA PATRIOT Act.
The regulator posted another notice pulling a separate December 2020 proposal intended to require banks and money services businesses to verify and retain identities and transaction records for amounts north of $3,000 involving unhosted wallets or foreign platforms operating outside areas covered by U.S. banking rules.
If a single or several transactions from the same entity exceed $10,000 within 24 hours, banks and money services businesses would be required to alert FinCEN.
FinCEN explained in its withdrawal notice that it hit the brakes after receiving warnings that the 2023 proposals were too loose in how they defined mixing, writing that the “expansive definition of CVC mixing” risked a chilling effect on legitimate activity and a heavy reporting load on covered institutions.
The current definition that Coin Center criticized as “extraordinarily broad” packed dedicated mixing services and auxiliary areas such as pooling funds from several users, splitting transfers into independent transactions, spinning up single-use wallets, and adding user-initiated delays so deposits and withdrawals couldn’t be matched by timing into the same box.
Coinbase called out the absence of any dollar threshold in its January 2024 comment letter objecting to the same FinCEN proposal.
The agency said while it agrees with the President’s Working Group on Digital Asset Markets July 2025 report that “lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains,” it also believes that illicit actors use mixers.
As the proposals were never finalized, the withdrawals do not change much for financial institutions. Exchanges will continue to operate in accordance with their anti-money-laundering and know-your-customer rules.
Despite rolling back the proposals, prosecutors from the Southern District of New York continue to press on with their own case against Roman Storm in an October 5 letter to U.S. District Judge Katherine Polk Failla, pursuing what they called supplemental authority on venue for two of the charges Storm still faces.
Storm posted the filing himself, writing on X: “The DOJ is still coming after me with everything it has. They really want to see me convicted.” Storm has been in custody for at least 1,139 days since his arrest.
SDNY prosecutors are building their argument on the precedent set by the September 25 United States v. Sterlingov appeals decision, in which the D.C. Circuit ruled that venue was proper for a mixer operator because transfers to and from the service “furthered [the mixer]’s ability to launder the funds of all users” and because the mixer “served customers in the district.”
Prosecutors also cited trial testimony that depositor Shakeeb Ahmed used Tornado Cash from his Manhattan apartment.
Storm was convicted in August 2025 on one count of conspiring to run an unlicensed money transmitting business that moved more than $1 billion in criminal proceeds, a charge carrying up to five years, according to the SDNY.
The jury deadlocked on the money laundering and sanctions evasion counts. Prosecutors chose to retry him on those, and Judge Failla has set the retrial for April 26, 2027; Storm’s acquittal motion from September 2025 remains undecided after oral argument in April. A conviction on the two open counts could carry up to 40 years.
The timing frames a real tension in Washington’s posture on crypto privacy. FinCEN, a rulemaker, is stepping back. SDNY, a prosecutor, is leaning in. The Justice Department has tried to square that circle: in August 2025, Acting Assistant Attorney General Matthew Galeotti said the department works “as prosecutors, not regulators,” and would not treat writing code, without ill intent, as a crime.
For now, the regulatory crackdown is gone and the criminal case is not.
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