IRS Agent Testifies in Tornado Cash Co-Founder’s Trial

U.S. prosecutors are moving closer to concluding their case against Tornado Cash co-founder Roman Storm, presenting testimony from an Internal Revenue Service agent as the trial enters a critical phase.

According to Inner City Press, IRS Criminal Investigation Special Agent Stephan George testified on Wednesday that he had reviewed transaction data from exchanges Crypto.com and Binance linked to Tornado Cash. 

George stated that Storm appeared to have control over funds moved to Tornado Cash’s smart contract addresses, referencing communications between Storm and co-founders Alexey Pertsev and Roman Semenov.

Storm’s legal team challenged the testimony, arguing it should be excluded due to questions around the expertise of a previous witness, Hanfeng Lin, who testified as a victim of a romance scam involving stolen crypto. Storm’s attorneys suggested that Lin’s analysis did not qualify him to trace crypto linked to criminal activities or attribute wallet addresses to hackers, raising concerns over the accuracy of the government’s tracing methods.

Control Over Tornado Cash at Center of Case

At the heart of the case is whether Storm had the ability to control Tornado Cash’s operations to prevent or disincentivize illicit transactions from flowing through the crypto mixer, a point the prosecution argues is key to their charges. 

The government claims Storm could have altered the crypto mixer’s code to deter money laundering, though testimony reportedly focused more on how the platform responded to sanctions rather than technical control over transactions.

Storm faces multiple charges, including conspiracy to operate an unlicensed money-transmitting business, money laundering, and conspiracy to violate U.S. sanctions. The trial comes as regulators globally scrutinize crypto mixers like Tornado Cash, which allow users to obscure the origin and destination of funds on public blockchains, often drawing allegations of facilitating illicit transactions.

Defense to Call Doctors and Chainalysis Expert

Prosecutors expect to close their case by Thursday afternoon, after which Storm’s legal team will begin presenting their defense. According to reports, Storm’s attorneys plan to call “two or three doctors” to testify, which may relate to Storm’s health or mental state, alongside a potential expert witness from blockchain analytics firm Chainalysis.

The outcome of this case could set significant legal precedents for developers in the crypto space, particularly regarding their responsibilities and liabilities tied to open-source protocols used by third parties for illicit purposes.