Prosecutors Lean on Bitcoin Fog Appeal to Keep Roman Storm Case in Manhattan

Federal prosecutors are anchoring Roman Storm’s Tornado Cash fight in Manhattan to a fresh appellate win in the Bitcoin Fog case—arguing that where a user clicked “mix” is enough to fix venue. It’s a strategic read on jurisdiction in crypto that, if it stands, will ripple far beyond mixers.

What prosecutors told Judge Failla - In a Monday letter to Judge Katherine Polk Failla (SDNY), prosecutors said the D.C. Circuit’s September 25 opinion upholding Bitcoin Fog founder Roman Sterlingov’s conviction and 150‑month sentence supports trying Storm in New York. - The filing targets two counts: money laundering conspiracy and conspiring to operate an unlicensed money transmitting business. Storm’s motion for acquittal—arguing, among other things, improper venue—was argued in April and remains pending. - A Manhattan jury in August 2025 convicted Storm on the unlicensed money transmitting conspiracy and hung on the money laundering and sanctions counts.

Why the Bitcoin Fog ruling matters - Venue is constitutional: a case must be tried where at least part of the crime occurred. - In Sterlingov, venue in D.C. hinged heavily on a sting: a special agent sent roughly $250 in Bitcoin to Bitcoin Fog from Washington and withdrew almost all of it the next day. The appellate court said that was enough. - Prosecutors now map that logic onto Tornado Cash via user Shakeeb Ahmed’s testimony that he accessed the service “in [his] apartment in Manhattan.” Defense counsel argued Ahmed’s funds “sat too briefly” to advance any conspiracy; prosecutors countered the deposit stayed a “couple days,” comparable to the agent’s timing in Bitcoin Fog. - At the April hearing, Storm’s attorney Brian Klein added that Ahmed used Tornado Cash before his crime and “didn’t actually use Tornado Cash for his hack.” - On the money‑transmitting count, prosecutors note the D.C. Circuit found venue proper simply because Bitcoin Fog “served customers in the District.” Ahmed’s testimony, they say, shows Tornado Cash served a Manhattan user, satisfying the same test.

Storm’s public response—and a shifting policy backdrop - Storm posted the letter on X, saying DOJ is still pressing his case and noting it has been 1,139 days since proceedings began, recalling his daughter’s age at his arrest. - The same day, Treasury’s FinCEN withdrew a 2023 proposal that would have required financial institutions to report transactions involving international crypto mixing. FinCEN cited commenters’ concerns that its broad “mixing” definition could chill legitimate activity. It also reiterated that illicit actors continue to use mixers and said it will keep monitoring the space. - That sits awkwardly beside prosecutor Ben Arad’s April contention that once Tornado Cash was largely serving criminals, even legitimate transactions became illegitimate—a framing Judge Failla pushed back on: “I’m concerned if that’s your theory.”

My take: the venue hinge is end‑user geolocation The government is increasingly treating decentralized tools like place‑based services. If a single user in Manhattan interacts with the protocol—and their coins linger for “a couple days”—that can anchor venue. Technically, that collapses global, permissionless architecture into a local “service” through user IP and sworn testimony. Business‑wise, this nudges founders to price in venue risk wherever users sit, not where code runs or teams reside. Psychologically, a $250 sting or a single Manhattan user becomes an intuitive hook for juries—simple stories often win over complex network realities. Ethically, the theory risks expanding liability by association: once prosecutors assert criminal predominance on a protocol, benign use can be recast as illicit—exactly the chilling effect FinCEN flagged in walking back its broad reporting rule.

What’s next - Judge Failla has not ruled on Storm’s acquittal motion. - Retrial on the two deadlocked counts is set for April 26, 2027; prosecutors had sought to start this month. - In Europe, Tornado Cash developer Alexey Pertsev was convicted of money laundering in the Netherlands in 2024 and is on electronic monitoring pending appeal.

The through‑line: venue by user location is becoming a favored lever. Developers and investors should assume prosecutors will mine testimony and on‑chain timing to build jurisdiction, even when the code is everywhere and the team is not.