US Prosecutors Drop Partial Charge Against Tornado Cash Founder as Crypto Enforcement Shifts

Acting U.S. Attorney for Manhattan, Jay Clayton informed Judge Katherine Polk Failla in a letter dated May 15 that the government will no longer pursue one part of its original indictment: the claim that Storm conspired to operate Tornado Cash as an unlicensed money-transmitting business by failing to register appropriately.

Clayton cited the DOJ’s revised stance from an April 7 memorandum issued by Deputy Attorney General Todd Blanche, which stated that the Department would no longer pursue crypto cases that amount to “regulation by prosecution.” The memo clarified that developers and operators of crypto mixing services would not be held accountable for the independent actions of users or unintended breaches of regulation.

“After review of this case, this Office and the Office of the Deputy Attorney General have determined that this prosecution is consistent with the letter and spirit of the April 7, 2025 Memorandum,”

Clayton wrote.

Despite this partial retreat, prosecutors are continuing with the central allegations. Storm still faces charges of transmitting funds he allegedly knew were tied to criminal activity or intended to fund unlawful operations. The Justice Department has accused Tornado Cash of laundering more than $1 billion in cryptocurrency, including transactions linked to North Korea’s sanctioned hacking unit, the Lazarus Group.

The DOJ will also press ahead with the other two charges in Storm’s indictment: conspiracy to commit money laundering and conspiracy to violate U.S. sanctions. Each of these carries a maximum penalty of 20 years in prison. The dropped charge carried a maximum five-year sentence. Storm has pleaded not guilty, with his trial set for July 14. His co-founder, Roman Semenov, remains at large and is believed to be in Russia.

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