Paradigm has filed an amicus brief in the matter of United States v. Roman Storm, warning that prosecuting software developers as money transmitters without custody of funds threatens legal norms, software innovation, and open-source development in the U.S.
High-Profile Amicus Brief Challenges Prosecutorial Overreach
Crypto investment firm Paradigm has formally filed an amicus brief in the ongoing U.S. legal case United States v. Roman Storm, expressing concern that the prosecution’s stance could have severe consequences for software development in the United States.
An amicus brief is a legal document submitted by an outside party with a vested interest in a case’s outcome, offering the court additional information, expertise, or perspective to consider.
The case, brought by the U.S. Attorney’s Office in the Southern District of New York (SDNY), targets Roman Storm, co-founder of Tornado Cash, under allegations that developing software enabling peer-to-peer crypto transactions amounts to “money transmitting” under 18 U.S.C. §1960, a claim Paradigm and other legal commentators argue contradicts longstanding regulatory guidance and case law.
Paradigm’s Call for Jury Clarity
In its amicus brief filed in a New York District court on June 13, Paradigm contends that if the charges are not dismissed, the court must carefully instruct the jury on the legal definition of a money transmitter. Specifically, jurors should be required to find beyond a reasonable doubt that Storm knowingly operated a business transmitting funds for the public, collected recurring fees, and exercised control over the transmitted funds.
Paradigm maintains that without custody or control, the act of transmitting funds is legally and practically impossible. The firm concluded by warning that allowing the SDNY’s interpretation to stand could set a precedent threatening not only crypto innovation but open-source development in sectors like AI and broader fintech.
A Case With Far-Reaching Implications
At the heart of the legal dispute is whether merely creating and publishing open-source code for decentralized applications can be treated as a criminal act if that code is later misused. Paradigm highlighted in its brief that for years, the U.S. Treasury Department explicitly clarified that “the production and distribution of software, in and of itself, does not constitute acceptance and transmission of value.”
Further, in 2019, the Treasury emphasized that whether an intermediary exerts “total independent control” over users’ cryptocurrency is a critical factor in determining money transmitter status under the Bank Secrecy Act. Paradigm argues that Storm, as a developer of non-custodial, neutral Tornado Cash software, should have been able to rely on this guidance without facing criminal prosecution.
DOJ’s Own Policy Shift at Odds With Prosecution
In a noteworthy development, the Department of Justice (DOJ) issued a policy memo in April explicitly discouraging the type of prosecutorial action now being taken against Storm.
While SDNY dropped charges under those specific registration provisions, it continues to pursue Storm using a different prong of Section 1960, leveraging what critics see as a loophole to argue that a developer can be criminally liable without custody or control of funds — a position Paradigm calls inconsistent with both the law and operational realities.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice
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