Complex Civil and Criminal Cases Converge
On August 17, 2023, Judge Robert Pitman of the federal district court for the Western District of Texas issued an Order granting summary judgment for the U.S. Treasury Department (“Treasury”) in a lawsuit brought by six individuals, and denying the cross-motion for summary judgment filed by the individuals. The lawsuit alleged that Treasury overstepped its authority by imposing sanctions on the coin mixing service Tornado Cash. Deciding for the government, Judge Pitman determined that Tornado Cash is a “person” that may be designated by OFAC sanctions. Specifically, the regulatory definition of “person” includes an “association,” and Tornado Cash is an “association” within its ordinary meaning.
Shortly thereafter, on August 23, 2023, the U.S. Department of Justice (“DOJ”) unsealed an indictment returned in the Southern District of New York against the alleged developers of Tornado Cash, Roman Storm (“Storm”), a naturalized citizen residing in the U.S., and Roman Semenov (“Semenov”), a Russian citizen. The indictment charges them with conspiring to commit money laundering, operate an unlicensed money transmitting business, and commit sanctions violations involving the International Emergency Economic Powers Act, or IEEPA. When the indictment was unsealed, Storm was arrested and then released pending trial. Treasury simultaneously sanctioned Semenov, who remains outside of the U.S., adding him to OFAC’s Specially Designated Nationals and Blocked Persons (“SDN”) List.
These are very complicated cases raising complicated issues. They are separate but obviously related. As we will discuss, the factual and legal issues tend to blend together, and how a party characterizes an issue says a lot about their desired outcome: has the government taken incoherent action against a technology, or has it pursued a group of people attempting to hide behind tech?