Connect with us

Uncategorized

Legitimate Privacy Tool or Dirty Money ‘Laundromat’? Lawyers Debate Role of Tornado Cash on Day 1 of Roman Storm Trial

Published

on

NEW YORK — There is at least one fact that both the defense and the prosecution agree in the ongoing criminal money laundering trial of software developer Roman Storm: the product he helped to create and run — a once-popular crypto privacy tool called Tornado Cash — was exploited by hackers and cyber criminals to launder their dirty money.

What the parties do not agree on, and the fundamental question at the heart of Storm’s trial, is whether Storm was able to prevent this behavior, whether he knew which criminals were using the Tornado Cash protocol and how and, most importantly, whether he should be held criminally liable for creating a tool that bad actors used to cover their tracks.

Storm, 36, has been charged with conspiracy to commit money laundering, conspiracy to violate U.S. sanctions, and conspiracy to operate an unlicensed money transmitting business — charges which, if Storm is convicted, carry a maximum combined sentence of 45 years in prison. His trial kicked off in Manhattan on Monday, and opening arguments took place Tuesday afternoon after lawyers selected a 12-person jury to oversee the three-week trial.

Read more: Jury Seated for Tornado Cash Dev Roman Storm’s Trial

During the government’s opening statements, prosecutor Kevin Mosley told the jury that Roman Storm “knew that his business was laundering dirty money” and that he made millions of dollars doing it. Mosley said the jury would see a photo of Storm wearing a t-shirt with a picture of a washing machine with Tornado Cash’s logo on it — evidence that he allegedly knew exactly what Tornado Cash was being used for.

Storm, Mosley said, turned a blind eye to the hackers using his platform and ignored pleas from scam victims who reached out to him, asking for help recovering their money. Though prosecutors claim Storm either told the victims he couldn’t help them or ignored them entirely, Mosley said Storm maintained full control over the Tornado Cash platform, even tweaking it “to make it even better for criminals to hide their money.”

Some of Tornado Cash’s users included North Korea’s infamous state-sponsored hacking organization, the Lazarus Group, which used Tornado Cash to launder the proceeds of its 2022 hack of Axie Infinity’s Ronin Network. Mosley told the jury that, by allegedly facilitating the Lazarus Group’s money laundering, Storm and his “co-conspirators” — fellow developers Alexey Pertsev and Roman Semenov — violated U.S. sanctions against North Korea. Mosley said Storm knew Tornado Cash was helping North Korea skirt U.S. sanctions because he allegedly texted Semenov and Pertsev, “guys, we’re done for” after news of the Axie Infinity hack broke.

Storm’s lawyers, of course, see the facts of the case very differently. In her opening statements to the jury, Keri Axel, a partner at Waymaker LLP, said that Storm’s text to Pertsev and Semenov after the Axie Infinity hack had nothing to do with sanctions, and everything to do with the impact of the hack on Tornado Cash’s reputation, as well as the price of the TORN token, which suffered in the wake of the hack. The washing machine t-shirt, she said, was a joke “in poor taste.”

Storm, Axel said, didn’t work with hackers or scammers, and didn’t want them using his product.

“These criminals, acting without any assistance from Roman [Storm], misused Tornado Cash,” Axel said. “You will not see any evidence that he communicated with them or assisted them, absolutely none.” The fact that Tornado Cash was continuously exploited by bad actors “ultimately killed his dream” of creating a privacy tool that was widely adopted and respected throughout the crypto community, Axel said.

It is privacy — and the legitimate need and desire for it — that sits at the core of Storm’s defense. His lawyers told the jury that their client, a Kazakhstan-born U.S. citizen who taught himself to code while working odd jobs as a bus boy and a security guard before jumping to the tech industry, was inspired to create a privacy tool after meeting Ethereum co-founder Vitalik Buterin, who she described to the jury as a “crypto rockstar.”

While Axel admitted that Tornado Cash was “misused” by bad actors, she said that they represented a minority of the tool’s users — most of whom she said were normal people using Tornado Cash to preserve their privacy.

“It’s not a crime to make a useful thing that’s misused by bad people,” Axel said, comparing Tornado Cash to a smart phone used to scam people, or a hammer used to break into homes.

She explained to the jury that, because the blockchain is public and easily searchable, any known wallet address can be searched, and its transactions (and the value of its contents) can be viewed by anyone. Axel explained that, in the crypto industry, loss of privacy has led to the recent string of kidnappings and attacks on high-net worth individuals and executives.

“How would you feel if someone took your bank account and published it on the internet?” Axel asked the jury. “You would feel exposed and probably unsafe.”

Axel told the jury that they would hear testimony from a host of victims and hackers, none of which could be directly connected to Roman Storm. The hackers, she said, were only testifying “in the hopes that they can get leniency in their own criminal cases” and that Storm lacked the power to help their victims.

First witness

After opening statements concluded, the government called its first witness, a Taiwan-born Georgia resident named Hanfeng Ling. Ms. Ling told the court how she was the victim of a pig butchering scam in the fall of 2021, that began with a wrong-number Whatsapp message. The scammer convinced Ling to transfer nearly $200,000 from her savings account to purchase crypto and then “invest” the crypto in a fake foreign exchange trading platform.

Ms. Ling’s testimony will continue on Wednesday. Nathan Rehn, the lead prosecutor, told the court that he expects her testimony will be followed by four more government witnesses on Wednesday.

The bulk of Storm’s trial is expected to take place over three weeks, followed by jury deliberation.

Continue Reading
Click to comment

Leave a Reply

Ваш адрес email не будет опубликован. Обязательные поля помечены *

Uncategorized

Bitcoin Devs Float Proposal to Freeze Quantum-Vulnerable Addresses — Even Satoshi Nakamoto’s

Published

on

By

A new Bitcoin draft proposal wants to do what’s long been unthinkable: Freeze coins secured by legacy cryptography — including those in Satoshi Nakamoto’s wallets — before quantum computers can crack them.

That’s according to a new draft proposal co-authored by Jameson Lopp and other crypto security researchers, which introduces a phased soft fork that turns quantum migration into a ticking clock. Fail to upgrade, and your coins become unspendable.

That includes the roughly 1.1 million BTC tied to early pay-to-pubkey addresses, like those of Satoshi’s and other early miners.

“This proposal is radically different from any in Bitcoin’s history just as the threat posed by quantum computing is radically different from any other threat in Bitcoin’s history,” the authors explained as a motivation for the proposal. “Never before has Bitcoin faced an existential threat to its cryptographic primitives.”

“A successful quantum attack on Bitcoin would result in significant economic disruption and damage across the entire ecosystem. Beyond its impact on price, the ability of miners to provide network security may be significantly impacted,” they added.

The draft BIP outlined three phases:

Phase A: Banning sending funds to legacy ECDSA/Schnorr addresses, nudging users toward quantum-resistant formats like P2QRH. (Starts 3 years after BIP-360 implementation)

Phase B: Make all legacy signatures invalid at the consensus layer. Coins in quantum-vulnerable addresses become permanently frozen. (Kicks in 2 years after Phase A)

Phase C (optional): Introduce a recovery path for stuck coins using zero-knowledge proof of BIP-39 seed possession. This could be a hard or soft fork.

But Why Now?

Bitcoin’s cryptography has never faced an existential threat and still doesn’t, except pre-emptive ones that can possibly target early wallets. Researchers say quantum computers capable of breaking ECDSA may arrive as soon as 2027.

A May report by CoinDesk flagged a new study suggesting that breaking RSA encryption with quantum computers may require 20 times fewer resources than previously thought.

Although Bitcoin uses elliptic curve cryptography, it remains vulnerable to quantum attacks similar to those threatening RSA. Current quantum computers are not yet capable of breaking these encryption methods, but research is rapidly advancing.

Earlier in July, eight legacy Bitcoin wallets moved over $8.5 billion worth of ‘Satoshi-era’ bitcoin after 15 years of dormancy — sparking speculation, among some, about moving to wallets with improved security as

That’s the red line for Lopp and the team.

Around 25% of all bitcoin have exposed their public keys, meaning they’re vulnerable to a “Q-day” style attack. If attackers are patient, they could use quantum tools to quietly drain dormant wallets over time without tripping alarms.

“Quantum attackers could compute the private key for known public keys then transfer all funds weeks or months later, in a covert bleed to not alert chain watchers,” the draft proposal stated. “Q-Day may be only known much later if the attack withholds broadcasting transactions in order to postpone revealing their capabilities.”

The proposal is still in draft stage and has no BIP number yet. And it may be the only way Bitcoin survives a quantum future.

Read more: Is Crypto Ready for Q-Day?

Continue Reading

Uncategorized

Eclipse Launches $ES Airdrop, Distributing 15% of Token Supply

Published

on

By

Eclipse, the layer 2 that combines technology from the Ethereum and Solana blockchains has gone live with an airdorp of its $ES token.

The team behind the network shared that the initial distribution will occur over the next 30 days.

According to a press release shared with CoinDesk, a total of 1 billion $ES tokens have been minted. Of the supply, 15% is allocated to an airdrop and liquidity provisions for core community members and developers who have supported the network from the start. 35% will support ecosystem growth and research and development, aimed to help scale the network.

Contributors will receive 19% of the supply, including team members,with a four year vesting period and three year lockup schedule. The remaining 31% is for early supporters and investors, who are subject to a three year lockup schedule in order to commit with Eclipse’s roadmap long-term.

The team also said that the $ES token serves several purposes on the network. It acts as the gas token for the Eclipse chain, and it also enables decentralized governance. Token holders will be able to vote on key protocol upgrades and fee structures, such as Maximal Extractable Value (MEV) redistribution rates. The team also emphasized that the token’s utility may evolve over time with its decentralized governance.

The eclipse network went live in November 2024, but not without some controversy. Neel Somani, Eclipse Labs’ co-founder and former CEO, was ousted from the company in May 2024 after he received some sexual misconduct allegations against him on X. Further controversy came in July when a CoinDesk investigation revealed that Somani had secretly allocated an outsize share of the $ES supply to a partner at Polychain. That deal with the Polychain partner no longer exists, a spokesperson at Eclipse previously told CoinDesk.

Read more: VC Darling Eclipse Finally Debuts Its Solana-Ethereum Blockchain Hybrid

Continue Reading

Uncategorized

XRP Ledger to Star in Ripple- Ctrl Alt Deal to Tokenize Dubai Real Estate

Published

on

By

Ripple has expanded its institutional custody services into the Middle East, partnering with UAE-based tokenization platform Ctrl Alt to support Dubai’s government-led real estate digitization initiative.

The deal, announced on Tuesday, will see Ctrl Alt use Ripple’s custody infrastructure to store tokenized property title deeds issued by the Dubai Land Department (DLD) on the XRP Ledger (XRPL).

Ripple’s technology will underpin the secure storage and lifecycle management of fractionalized real estate titles, which forms a key component of Ctrl Alt’s end-to-end infrastructure for asset tokenization.

Ctrl Alt recently became the first VASP in Dubai authorized to offer issuer-related services under the Virtual Assets Regulatory Authority (VARA), tying token issuance directly to on-chain custody.

The move comes amid growing momentum for cryptocurrencies in Dubai. Ripple was granted a license by the Dubai Financial Services Authority (DFSA) earlier this year and has since launched partnerships with Zand Bank and Mamo, and secured approval for its RLUSD stablecoin within the Dubai International Financial Centre (DIFC).

Continue Reading

Trending

Copyright © 2017 Zox News Theme. Theme by MVP Themes, powered by WordPress.