NEW: SDNY is no longer “pursuing the theory” that Tornado Cash is a financial institution.
This is good news, but it’s also insane. Here’s what this means:
SDNY has dropped the charges against Storm on 18 USC §1960(b)(1)(B), the federal regulation for money service businesses that imposes the Bank Secrecy Act on financial institutions.
But SDNY *does* want to keep charging Storm with 18 USC §1960(b)(1)(C), which does not stem from the BSA, but from the PATRIOT Act – criminalizing the transmission of illicit proceeds.
Here’s the issue though: 18 USC §1960(b)(1) governs *licensing requirements*. If Storm isn’t charged with state-level licensing violations under 1960(b)(1)(A), and is now no longer charged with federal licensing violations under 1960(b)(1)(B), then who on earth was he supposed to register with under 1960(b)(1)(C)? The Holy Spirit? And what would applying for such a license even look like? “Hello, I’m planning to transmit illicit funds, can I have a license please?”
As pointed out by the defense, SDNY is heavily contradicting itself with this nonsense, by a) essentially arguing that (C) is *not contingent on* the rest of the statute, which honestly just makes no sense at all, and b) having previously argued that the difference between charging WhatsApp and Tornado Cash for money laundering under 18 USC 1956 was that one is a financial institution, while the other isn’t.
My favorite tidbit from this back and forth however is that SDNY will no longer call a witness from FinCEN after senior officials told prosecutors in Samourai Wallet case that SW did not qualify as a MSB due to its non-custodial design – just like TC.
This case needs to be thrown out before it reaches a jury where SDNY can play on nat sec emotions and set precedent to override Bernstein v US. Code is speech. Leave us alone. Phone conference is scheduled for next Friday.
Full story:
The Rage
Tornado Cash: SDNY Abandons "Financial Institution Theory"
SDNY is abandoning the theory that Tornado Cash was a financial institution, causing debate over remaining charges
