It's one thing to do "regulation by enforcement," as we've arguably seen from the SEC. It's even worse to see the DOJ engage in regulation by criminal prosecution.

That's exactly what is happening with the unlicensed money transmission charges against Tornado Cash and Samourai devs. Make no mistake. If the prosecution successfully argues unlicensed money transmission in either case it will overturn all of the good guidance and administrative rulings we've gotten from the actual federal AML regulator, FinCEN, over the last 10 years. The Tornado Cash reply brief already spells it out: basically argues that the guidance (upon which everyone has relied) is irrelevant.

Today, Coin Center filed an amicus brief in Roman Storm's criminal case. The government has wrongly charged the Tornado Cash developers with criminal conspiracy and we are here to help set the record straight and defend First Amendment rights to publish software.

Our brief clarifies Tornado Cash's operation. We focus on the immutability of the pool smart contracts and the non-essential nature of the other software tools authored by the defendants (the upgradable secondary smart contracts and the user interface). We compare the UI to TurboTax, entirely optional software that can help you do your taxes but that leaves it to you to file them correctly and pay.

We counter the government's misleading portrayal of Tornado Cash as a "haven for criminals," stressing its legitimate privacy benefits, which Coin Center has used to receive charitable donations.

Our legal arguments focus on the sanctions evasion conspiracy charge, emphasizing statutory exemptions for information transactions (the Berman Amendments) and the First Amendment's protection of software publication as free speech.

With the Berman Amendments in mind, we make an important comparison between the Tornado Cash protocol and the SWIFT interbank settlement network. Both messaging systems are and should be exempt from direct sanctions prohibitions because they deal only in transactions in information. Additionally, and unlike SWIFT, the Tornado Cash devs have no actual control over the messages users send using their software tools.

Finally we detail important recent First Amendment cases where data-brokers and web developers have enjoyed the strongest constitutional protections even when engaged in commercial and highly technical speech for profit.

This case will significantly impact digital civil liberties, and we're honored to do our part defending Roman's rights, everyone's rights, to develop and publish software.

Link to full brief in the next post.


You can find a longer summary and link to our full brief here: coincenter.org/coin-center-fi…

1/ New detailed factual explanation of how Tornado Cash works. Huge thanks to @wadeAlexC and @LewellenMichael for this unbiased description of exactly how the contracts function. It confirms a level of decentralization that was surprising, even to me. coincenter.org/education/adva… 2/ None of the core Tornado Cash contracts that provide privacy tools to users can be upgraded, changed, or altered. The privacy that users get from these contracts is guaranteed with math and software that is as immutable as the Ethereum blockchain itself.