Tornado Cash Trial Takes a Turn as Roman Storm's Lawyers Mull Mistrial

Developer Roman Storm’s lawyers are considering calling for a mistrial after a federal prosecutor presented at witness and expert testimonies with seemingly little relevance to their client's privacy protocol Tornado Cash, the lawyers said Monday in federal court in New York.

A mistrial is a trial that is deemed invalid due to an error or misconduct in judicial proceedings, such as a hung jury or improper admission of evidence. In the event of a mistrial, a case may be dismissed or retried with a new judge and jury.

The defense raised the possibility of a mistrial to U.S. District Judge Katherine Polk Failla on Monday, just a few days after the federal government called on Taiwan-born Hanfeng Lin to testify against Storm, the developer who co-founded the Ethereum mixing service that makes it more difficult to trace the flow of funds on the public ledger.

According to her testimony, Lin lost roughly $250,000 in 2021 in a pig butchering scam, a type of con in which fraudsters gain the trust of victims and encourage them to send their accomplices funds, typically in the form of cryptocurrencies. Lin testified that she enlisted a crypto recovery service called Payback in the hopes of retrieving her stolen funds. The business later sent her a report that suggested some of her funds had traveled through Tornado Cash, Lin said in her testimony.

But the defense pushed back on that version of events, arguing on-chain evidence does not support Payback’s claim that some of Lin's funds went to Tornado Cash.

“Based on our research over the weekend, we can’t find that any of Ms. Lin’s funds went to Tornado Cash,” Storm's lawyers said Monday, according to Inner City Press. “We need to confer with Mr. Storm about moving for a mistrial.”

The potential push for a mistrial comes as blockchain experts show significant interest in Storm’s criminal trial. The case is poised to clarify coders’ legal liabilities under existing U.S. laws and has largely been painted by adherents of the cypherpunk movement as a proxy for the fight to protect privacy-preserving technologies from authoritarian encroachment, even when efforts to preserve those rights clash with public safety goals.

Storm faces charges of operating an unlicensed money-transmitting business and violating U.S. sanctions, in addition to one count of conspiracy to launder money. He faces a maximum of 45 years in prison if found guilty on all counts.

However, prominent on-chain sleuths have poked holes in the federal government’s case against Storm, bolstering the defense's claim that there might be grounds for a mistrial.

Taylor Monahan, principal security researcher for software wallet MetaMask, wrote in a series of social media posts on Friday that on-chain data backs up the claim that Lin’s funds did not appear to go to Tornado Cash.

“I have no clue what [Payback team members] were tracing. There’s no Tornado Cash,” Monahan wrote in one of the posts, referring to an on-chain data analysis she performed using the transaction numbers for payments Lin sent to her scammers.

ZachXBT, a prominent, pseudonymous on-chain sleuth, endorsed Monahan's findings in his own social media post on Friday.

Monahan also questioned the legitimacy of Payback's services, calling its employees “bumbling fucking idiots.”

Payback did not immediately respond to Decrypt's request for comment.

Exploits and scams have long posed a major risk to decentralized finance users, spurring a cottage industry of so-called blockchain sleuths who offer to recover funds lost in exploits and other cyberattacks.

But there is no crypto industry-wide certification that regulates who can call themselves an “on-chain sleuth,” nor who can offer recovery services to victims of hacks.

The FBI’s San Diego Field Office seized Payback’s website last year as part of its efforts to “crack down on an emerging scam” to defraud cryptocurrency scam victims, according to a September statement from the agency.

Nevertheless, the prosecution claimed that it will soon provide evidence that Lin's funds did, in fact, travel through Tornado Cash.

“We have an expert, IRS Agent George, who will testify about the few short hops to Tornado Cash,” assistant U.S. attorney Thane Rehn said Monday in court, Inner City Press reported.

“I've never seen this lack of communication in any criminal case I've presided over,” Judge Failla said, per the publication.