Code is protected speech? Not so fast, a U.S. district judge ruled last week in the high-profile case around Ethereum coin mixer Tornado Cash.
Judge Katherine Polk Failla rejected developer Roman Storm’s motion to dismiss his case in the Southern District of New York last Thursday. Over a year after the Tornado Cash co-founder was arrested on money-laundering charges, Failla ruled that his case could proceed to trial.
While Failla found that Storm had been adequately charged, Storm argued in his motion to dismiss that his charges infringed on his First Amendment rights. He stated it has been “well established” that computer code, such as a coin-mixing service, is protected speech.
“This prosecution represents an unprecedented attempt to criminalize the development of software,” Storm argued in his shot-down motion, adding that “the protections of the First Amendment apply to computer code, and computer programs constructed from code.”
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A U.S. district court judge ruled Thursday that the money laundering case against Roman Storm shall proceed, denying the Tornado Cash co-founder’s motion to dismiss the high-profile case. The ruling delivered by Judge Katherine Polk Failla in the Southern District of New York found that prosecutors plausibly charged Storm with conspiring to operate an unlicensed money transmitter, facilitating money laundering and sanctions evasion in operating the coin-mixing service. Notably, Failla’s ruling...
When the United States sanctioned Tornado Cash in August 2022, banning the tool for masking Ethereum transactions and thus making them more difficult to track, the decision was decried by privacy advocates like Edward Snowden. The whistleblower warned the move was “deeply illiberal and profoundly authoritarian.”
The government has underscored Tornado Cash’s use by state-sponsored hackers as a threat, while crypto advocates have rallied around Storm’s cause. However, Failla’s ruling for industry-wide concerns boiled down to the statutes under which Storm was charged.
“These laws do not target protected expressive conduct,” Failla said of the laws Storm allegedly violated in launching and maintaining Tornado Cash. “They punish money laundering, [...] the operation of an unlicensed money transmitting business, and [...] sanctions evasion.”
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David Miller, a partner at Greenberg Traurig and formerly an assistant U.S. attorney in the Southern District of New York, told Decrypt that Failla’s rejection shouldn't be a surprise. Only under narrow circumstances are charges dismissed against an indictment, he said.
“The court ruled that using computer code to further alleged money laundering is not a First Amendment-protected activity,” he said. “This comes in the context of a motion to dismiss an indictment, and those are rarely granted in criminal cases.”
Functional vs. expressive
The First Amendment and coders have collided before. Members of the cypherpunk movement, from which Bitcoin was inspired, once advocated for cryptography in the name of free speech.
In an early internet era, Blockstream CEO Adam Back’s so-called “Munitions T-Shirt” emerged as a symbol of civil disobedience, featuring lines of code once deemed dangerous by the U.S. Others tattooed cryptography falling under government scrutiny directly onto their own skin.
As Failla noted, there are instances when code is being used to express a thought or idea. However, the functional capacity of code is not protected under the First Amendment, she said. As a result, the charges brought against Storm do not implicate free speech protections at all.
Miller said that Storm’s argument is reminiscent of free speech arguments made in material support of terrorism cases, which have been “universally rejected by courts.” That’s because the speech was in furtherance of a criminal objective, he added.
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“As a general matter, it is difficult for criminal defendants to raise a First Amendment defense to an indictment,” Miller said. “The reason for that is because the criminal charges themselves are predicated upon conduct that violates federal criminal law, meaning the conduct is not criminalized because of the speech.”
Even if Storm’s actions were considered speech, a legal test known as “intermediate scrutiny” would’ve been satisfied, Failla said. Because the laws under which Storm was charged do not look to specifically regulate speech, prosecutors would only have to show that the government has a “substantial interest” in its restriction for the charges to be considered constitutional.
“The government has a substantial interest in promoting a secure financial system,” Failla said. “These interests are wholly unrelated to the suppression of free expression, and the applicability of these laws to Mr. Storm's conduct does not burden substantially more speech than necessary [...] because the charged conduct implicates the functional rather than the expressive features.”
'Writing privacy code'
Following Storm’s arrest last year, Snowden and others encouraged donations to aid the developer’s legal fight—a sum that has swelled to $595,000 in Ethereum on the crowdfunding protocol Juicebox. Advocates have argued, meanwhile, that privacy is not a crime.
During previous campaigns, millions of dollars more had been raised to support “the freedom to publish code without fear of government persecution,” according to organizers of the Defend Roman Storm. Ethereum co-founder Vitalik Buterin has also weighed in on the issue.
Earlier this year, Alexey Pertsev was sentenced to 64 months in prison by Dutch authorities, who found that the Tornado Cash developer laundered $1.2 billion in illicit assets. Still, the support for Storm and his legal troubles continues pouring in.
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On Sunday, an individual donated 99.5 Ethereum worth $259,000 to the aforementioned Juicebox fund. An accompanying message said, “I hope someone will help me out when the government freezes my assets for writing privacy code.”
Yet Failla herself might disagree with the donor’s characterization.
“At this stage in the case, this court cannot simply accept Mr. Storm's narrative that he is being prosecuted merely for writing code,” she said during last week’s decision, describing it as “an overstatement of what's actually charged in the indictment.”
Despite Failla’s skepticism, Miller said that Storm’s attorney’s could still try to assert free speech arguments if the case goes to trial in early December. But whether Failla will permit those arguments in front of a jury is ultimately another matter, he said.
Edited by Andrew Hayward
