17th May 2025 > > Tornado Cash & alchemy.

tl;dr

The legal case against the developers of Tornado Cash raises important questions about our liberties and freedoms. The alchemists’ dream is made real.

Market Snap

Market Wrap

We are stuck in a boring consolidation phase. Perhaps altcoins can provide some entertainment?

Curious Cryptos’ Commentary – Tornado Cash

Privacy – be it financial, personal, or indeed whatever happens behind closed doors between consenting adults – Is a fundamental right owned by each of us, and not just some random privilege that is bestowed solely upon the technocratic elite, by the technocratic elite.

In the past, the US government has sought to imprison the writers of the code behind Tornado Cash.

Tornado is a mixer, a tool for obscuring the precise movements of cryptos by pooling a large number of inputs, and later distributing those inputs in exchange for a small fee. Like all technology, mixers can be used for nefarious purposes as well as legitimate ones. One should not ascribe criminal intent upon the inventors or users of new technology in the absence of any hard evidence.

The two developers of Tornado Cash have been given a bumpy ride until now.

Alexey Pertsev was convicted of money laundering by the Dutch courts (the US legal system has very long arms), and sentenced to 64 months in prison. Roman Storm, Alexey’s co-developer, has been accused of money laundering, sanction violations, and probably the torture of small, white, fluffy kittens, with a trial set for this summer in New York.

Since then, there have been some positive developments.

Alexey was released from jail, though remains under house arrest. OFAC (US Department of the Treasury’s Office of Foreign Assets) which sanctioned Tornado Cash, in a first of its kind, copying Gensler’s and the SEC’s regulation by enforcement philosophy, was found to have exceeded its authority by the US Fifth Circuit Appeals Court. The Deputy Attorney General circulated a memo entitled “Ending Regulation By Prosecution” early last month, a move that is entirely in line with the new ethos that is increasingly being adopted by the agencies of the US government:

https://www.justice.gov/dag/media/1395781/dl?inline=

This surely should end any legal worries that Roman might have?

Sadly not.

The State Department of New York has dropped some of the charges against Roman, but will continue with its claim that he is responsible for “transferring funds on behalf of the public” in contravention of money-laundering laws whilst also breaching sanctions. Penalties for those found guilty of these charges are – and rightly so – very harsh in the US, at up to 20 years in an unpleasant max security jail for each offence, to run consecutively. But does Roman deserve this fate?

Once the code for Tornado Cash had been written and released, neither Roman nor Alexey had any control over how it was used. We are not in their heads. We cannot make assumptions about their motivation for writing the code. This attempt to penalise individuals for exploring the use of crypto technology can achieve nothing more than driving innovation and development to less regulated environments. If you make space for Russian hackers, North Korean scammers, and Chinese money launderers, they will take up your kind offer.

This legal action must fail, for everyone’s benefit.

Curious Cryptos’ Commentary – Alchemy

I have never been a supporter of the “digital gold” narrative around Bitcoin. Obviously, the market cap of gold, currently sitting at $21 TRILLION, is the first staging post for BTC (equating to $1mm per BTC), but BTC has far more utility than gold bugs can ever conceive of. Paul Krugman, an anti-libertarian and unsurprisingly a Keynesian to boot, is a prime example of someone who just doesn’t get cryptos, and thinks only in outdated TradFi terms, but we will discuss more about him later this week.

Scientists at CERN have achieved the alchemists’ dream of turning lead into gold, with the (brief) ejection of three protons from an atom of lead. Once gold loses its scarcity value, where will people turn?

…

https://www.youtube.com/watch?v=TkZFuKHXa7w

“Needs must, when the devil vomits into your kettle”. Edmund Blackadder, circa Elizabethan times.