The Department of Justice filed a letter on October 5, 2026 opposing Tornado Cash co-founder Roman Storm's venue challenge, keeping his prosecution in the Southern District of New York — on the same day FinCEN formally withdrew its 2023 proposal to designate international crypto mixing a primary money laundering concern.

The timing sharpens a split inside the US government over privacy tools. One arm of the state stepped back from rulemaking that would have regulated mixers directly. The other doubled down on the highest-profile criminal case the sector has produced.

Where does the Storm case stand?

Storm was arrested in August 2023. The October 5 filing landed 1,139 days after that arrest, according to the case docket in SDNY.

On August 6, 2025, a jury convicted Storm of operating an unlicensed money transmitting business, a count that carries a maximum five-year sentence. The jury deadlocked on the two heavier charges: conspiracy to commit money laundering and conspiracy to violate US sanctions, each carrying up to 20 years.

The retrial on the deadlocked counts was originally set for October 26, 2026. The court moved it to April 26, 2027, with pretrial activity expected to begin in February 2027.

Storm's defense has its own motion pending. His team filed a Rule 29 motion for acquittal on all counts on September 30, 2025, arguing the evidence cannot support a conviction. The court heard oral arguments on April 9, 2026. As of October 2026, no ruling has issued.

The DOJ's new letter targets Storm's venue challenge directly. The filing signals the government's intent to hold the case in SDNY and continue pressing the deadlocked conspiracy counts rather than narrow the prosecution to the completed conviction.

What did FinCEN withdraw?

FinCEN reversed course on its 2023 proposal, which would have labeled international convertible virtual currency mixing a primary money laundering concern under Section 311 of the USA PATRIOT Act.

The agency's reasoning centered on scope. Commenters raised concerns that the proposal defined mixing so broadly it would discourage legitimate uses of privacy tools, and that the rule would have imposed substantial reporting obligations on a wide range of activity.

The withdrawal also aligns with suggestions in an earlier White House report addressing the privacy functions of mixers, marking a continued policy shift away from blanket treatment of mixing services.

Why does prosecutors' view of Tornado Cash remain unchanged?

The withdrawal of the FinCEN rulemaking does not soften the criminal case. Prosecutors continue to argue that the Tornado Cash protocol facilitated more than $1 billion in laundered funds tied to malicious activity.

Those allegations include funds linked to North Korea's Lazarus Group. The hacking unit's alleged involvement has been central to the sanctions-related conspiracy count — the charge carrying a potential 20-year sentence that the government intends to retry.

For protocol developers and compliance teams, the two October 5 actions cut in opposite directions. The regulatory perimeter around mixing is loosening at the rulemaking level, while individual criminal exposure for protocol founders remains fully intact at the Department of Justice.

What happens next?

Three dates now structure the timeline. The court must rule on the pending Rule 29 motion, under submission since the April 9, 2026 arguments. The judge must also resolve the venue dispute now that the DOJ has responded. Pretrial activity is then expected to begin in February 2027, ahead of the April 26, 2027 retrial on the money laundering and sanctions conspiracy counts.