DOJ Cites Bitcoin Fog Ruling in Fight Against Roman Storm…

Published: October 7, 2026 – 18:28 UTC

Federal prosecutors are using a new appeals court ruling involving cryptocurrency mixer Bitcoin Fog to strengthen their opposition to Tornado Cash developer Roman Storm’s bid for acquittal, arguing that even limited use of a mixing service within a judicial district can be enough to establish venue.In an October 5 filing in the Southern District of New York, prosecutors cited the D.C. Circuit’s September 25 decision affirming Bitcoin Fog operator Roman Sterlingov’s convictions and 150-month prison sentence. The appeals court upheld venue in Washington, D.C., for all four charges against Sterlingov, including money laundering and operating an unlicensed money-transmitting business.The government says the ruling directly supports its argument that Tornado Cash transactions conducted from Manhattan can establish venue in Storm’s case. U.S. District Judge Katherine Polk Failla has not yet ruled on Storm’s post-trial motion for acquittal.

Why Does the Bitcoin Fog Ruling Matter for Storm?

The venue issue centers on where enough of an alleged crime occurred for prosecutors to bring charges in a particular federal district.In Sterlingov’s case, an undercover agent used Bitcoin Fog from Washington, D.C., depositing roughly $250 in bitcoin during one transaction and later conducting another small transfer. The D.C. Circuit concluded that receiving and withdrawing funds through Bitcoin Fog from the district was sufficient for the money-laundering charges because the transfers formed part of the alleged laundering activity.For the unlicensed money-transmission charges, the court separately found that evidence showing Bitcoin Fog served customers in Washington was enough to establish venue there.Prosecutors say similar facts appeared at Storm’s trial. Shakeeb Ahmed testified that he accessed Tornado Cash from his apartment in Manhattan and deposited funds into the protocol for a period of roughly a couple of days.Storm has argued that Ahmed’s transactions did not sufficiently advance the alleged conspiracy and therefore cannot establish venue in the Southern District of New York.

Investor Takeaway

The dispute could affect more than Storm’s case. If courts accept customer activity as a sufficient basis for venue, developers and operators of globally accessible crypto protocols could face prosecution in districts where individual users interact with their software, even without a physical business presence there.

Can Small Mixer Transactions Establish Venue?

Prosecutors are emphasizing that the transactions underpinning the Bitcoin Fog ruling were small compared with the service’s overall activity.The D.C. Circuit said Bitcoin Fog had processed hundreds of millions of dollars in cryptocurrency, yet its venue analysis relied heavily on transactions conducted by an undercover agent in Washington. The court also rejected Sterlingov’s argument that allowing the government to rely on those transactions effectively permitted prosecutors to manufacture venue.The government is applying that reasoning to Tornado Cash. Trial testimony indicated that additional deposits increase the size of a mixer’s anonymity set, making it harder to trace where funds originated or ultimately went. Prosecutors therefore argue that Ahmed’s deposits helped Tornado Cash perform the function at the center of the alleged conspiracy, even though his funds remained in the protocol only briefly.The latest filing does not decide the issue. It gives Failla additional appellate authority to consider while reviewing Storm’s motion.

What Is Still Unresolved in the Tornado Cash Case?

A Manhattan jury in August 2025 convicted Storm of conspiracy to operate an unlicensed money-transmitting business but failed to reach unanimous verdicts on separate money-laundering and sanctions-conspiracy charges.Storm subsequently sought acquittal, arguing that prosecutors had not presented legally sufficient evidence to sustain the conviction. His defense has also challenged the government’s interpretation of money-transmission law, including arguments involving FinCEN guidance that became a separate dispute before trial.Failla heard arguments on the acquittal motion in April 2026 but has yet to issue a decision. Meanwhile, Storm’s retrial on the two deadlocked charges is scheduled for April 26, 2027, provided those charges remain pending.

Investor Takeaway

The immediate legal question is procedural, but the outcome could shape the jurisdictional exposure of decentralized protocols. A broad venue standard would give federal prosecutors greater flexibility over where cases involving borderless crypto services can be brought.

Why Is Treasury’s Mixer Rule Withdrawal Relevant?

The DOJ filing arrived the same day that the Treasury Department’s Financial Crimes Enforcement Network withdrew a separate 2023 proposal targeting convertible virtual currency mixing.The proposal would have treated international crypto mixing as a class of transactions of primary money-laundering concern and imposed additional reporting obligations on covered financial institutions. FinCEN said on October 5 that it was withdrawing the proposal after considering public comments and as part of the administration’s effort to make digital-asset rules more targeted.Storm criticized the contrast, arguing publicly that prosecutors continue pursuing his criminal case while Treasury is retreating from a proposed regulatory framework for mixers.The actions address different legal questions, however. FinCEN’s withdrawal eliminates a proposed reporting regime; it does not determine whether Storm violated existing criminal statutes or whether venue was proper in New York. The next consequential decision therefore remains with Failla, whose ruling on Storm’s acquittal motion could determine both the status of his existing conviction and the legal boundaries surrounding the next stage of the case.

Investor Takeaway

Policy toward crypto privacy tools is becoming less uniform rather than simply more restrictive or permissive. Treasury can narrow prospective regulation while prosecutors continue applying existing money-laundering and money-transmission statutes in court, leaving developers exposed to legal risk even as some proposed rules are withdrawn.

Source: FinanceFeeds