Federal prosecutors asked U.S. District Judge Katherine Polk Failla on Oct. 5 to reject Roman Storm's bid to move the Tornado Cash retrial out of New York, leaning on the D.C. Circuit's September ruling in a separate cryptocurrency mixer case as persuasive authority.

The letter from the Southern District of New York targets Storm's venue challenge on money-laundering and money-transmission conspiracy counts. Prosecutors argue that the appeals court's Sept. 25 decision in United States v. Sterlingov, which involved Bitcoin Fog, controls where the Tornado Cash case can be tried.

Storm co-founded Tornado Cash, an Ethereum-based service that obscures transaction trails by pooling and redistributing deposits. The Department of Justice has described his conduct as building, maintaining and profiting from a service "despite knowing it transmitted criminal proceeds." Storm, posting as @rstormsf on X, framed a potential prison term differently: as punishment "for writing code."

What does the Sterlingov appeal change for Storm?

Prosecutors center their argument on Shakeeb Ahmed, a Manhattan customer whose deposits allegedly enlarged Tornado Cash's anonymity pool even though the funds passed through briefly. They contend that serving a customer in the district supports venue for the money-transmission count.

The defense has yet to file its response to the Oct. 5 letter. Failla must now weigh the Sterlingov holding against Storm's contention that the New York connections were too thin to anchor a conspiracy prosecution.

Storm already carries an August 2025 conviction on one money-transmission conspiracy count, which carries a statutory maximum of five years. An Aug. 25, 2026 order scheduled his retrial on the remaining charges for April 26, 2027, pending the resolution of his acquittal motion and a defense continuance request.

Why has the Treasury withdrawal not ended the case?

FinCEN filed its withdrawal notice on Oct. 5 for Oct. 6 publication in the Federal Register. The agency is pulling back its 2023 finding and proposed enhanced reporting and recordkeeping measure for international cryptocurrency mixing, citing concerns about a "chilling effect on legitimate activity" and reporting burdens on financial institutions.

The agency recognizes lawful financial privacy while retaining monitoring authority for money laundering, terrorist financing, and other illicit activity. The withdrawal addresses an administrative proposal. It does not repeal criminal statutes or determine Storm's culpability.

DOJ's own enforcement posture contains a parallel boundary. Deputy Attorney General Todd Blanche's April 7, 2025 memo directed prosecutors away from targeting mixers for their users' conduct or unwitting regulatory violations and ordered a review of ongoing cases. The memo expressly excludes 18 U.S.C. § 1960(b)(1)(C), which covers funds known to come from crime or intended for unlawful activity, from its regulatory charging restriction.

In August 2025 remarks, Criminal Division head Matthew Galeotti added protection against new charges under that provision for qualifying decentralized software. To qualify, the code must:

• operate as truly decentralized infrastructure
• solely automate peer-to-peer transactions
• leave the third party without custody or control over user assets

That conditional promise did not retract Storm's existing conviction. The dispute therefore centers on whether Storm's developer activity crossed the criminal boundary, not whether privacy tools are categorically lawful.

How broad is the government's theory?

At an April 9, 2026 hearing, prosecutor Ben Arad argued that legitimate deposits helped conceal criminal funds, reinforcing the case against the developers. He distinguished innocent depositors' knowledge from the perspective of Storm and his alleged co-conspirators.

Failla pressed the government on whether the broader theory established willful conduct. Arad emphasized active steps to maintain and improve the service rather than simply leaving pools operational. The judge's questions exposed how far the prosecution is willing to stretch developer liability.

Where does the Ulbricht pardon leave Storm?

President Donald Trump's Jan. 21, 2025 pardon granted individual clemency to Ross Ulbricht, founder of the Silk Road marketplace, on specified convictions. The grant did not extend to Storm and did not establish a general exemption for cryptocurrency developers.

The next consequential developments are Failla's ruling on the venue challenge and any changes to the April 2027 retrial schedule. Washington's accommodation of lawful crypto privacy has not itself settled the contested criminal case.