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Prosecutors invoke a $250 Bitcoin Fog sting to defend trying Roman Storm in Manhattan

Prosecutors say the ruling upholding Bitcoin Fog's founder makes one Tornado Cash user's Manhattan transactions enough to try Roman Storm in New York. If Judge Katherine Polk Failla agrees, a mixer developer could be tried wherever one user deposits into the pool.

The Investor · Invest desk

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What happened

  • The D.C. Circuit's September 25 ruling found Washington venue largely on a sting in which an agent deposited about $250 of Bitcoin and withdrew almost all of it the next day.
  • Defense lawyers said Shakeeb Ahmed's funds sat in Tornado Cash too briefly to further any conspiracy; the letter says his deposit stayed "a couple days," comparable to the agent's.
  • Judge Katherine Polk Failla heard Storm's acquittal motion, which challenges venue among other grounds, in April and has not yet ruled.
  • FinCEN withdrew its 2023 proposal for reporting international crypto-mixing transactions on the same Monday, citing a possible "chilling effect on legitimate activity."

Why it matters

  • What it sets up precedent A government win would carry a venue rule set against Bitcoin Fog's operator over to a Tornado Cash developer, with an ordinary user's testimony standing in for an agent's sting.
  • What doesn't add up contradiction Treasury stepped back from mixer reporting over chilling-effect concerns on the day prosecutors pressed their widest venue reach, a split Storm cites as conflicting approaches to crypto privacy tools.
  • Who has to decide decision Failla's venue answer decides whether the Manhattan transmitting conviction stands and whether the deadlocked laundering count can be retried in the same court.

Tornado Cash and Bitcoin Fog pool users' crypto to break the on-chain link between where funds come from and where they go [1]. The laundering-count argument depends on that pooling. Prosecutors argued that even short-lived deposits help a mixer, because each one enlarges the pool of transactions used to obscure the movement of funds [7]. They said the Bitcoin Fog ruling "directly supports" their position [17].

The Constitution requires that a crime be tried where at least part of it took place [26]. Ahmed testified that he accessed the service from his apartment in Manhattan [5]. On the money-transmitting count, the letter's test is simpler still. It says the D.C. Circuit found venue proper solely because Bitcoin Fog had "served customers in the District," and that Ahmed's testimony shows Tornado Cash did the same in Manhattan [8].

Failla can go three ways. She could accept both arguments, keeping Storm's August 2025 conviction for conspiring to operate an unlicensed money transmitting business [10] and sending the deadlocked laundering count back to a Manhattan jury. She could split them, accepting the customer test for the transmitting count while finding that Ahmed's deposits did not further a laundering conspiracy. Storm's lawyer Brian Klein argued in April that Ahmed used Tornado Cash before committing his crime and "didn't actually use Tornado Cash for his hack" [22]. Or she could rule on intent, the ground Storm raised in September 2025 when he argued that prosecutors failed to prove he intended to help criminals misuse Tornado Cash [11]. An acquittal on that ground would make venue moot for the counts it covers.

In my view the split is the outcome the record supports best. The D.C. Circuit's laundering venue, in a ruling that affirmed a 150-month sentence, or 12.5 years [3][27], rested on an undercover agent's transactions from his Washington office [18]. Ahmed, on Klein's account, had not yet committed his crime when he used the service [22]. The government's reply is that any deposit, however brief, enlarges the pool [7]. If Failla adopts that pool reasoning for the laundering count, my view is wrong. Even the split would leave the transmitting count's venue resting on where the service had customers [8].

Failla has questioned the government's broadest theory once already. At the April hearing, prosecutor Ben Arad argued that once Tornado Cash was largely serving criminals, "even the legitimate transactions that went through Tornado Cash became illegitimate" [23]. "I'm concerned if that's your theory," Failla said [24]. Storm has now set Arad's argument beside FinCEN's withdrawal of its mixer rule [20].

The FinCEN notice also said illicit actors continue to use mixers and that the agency will keep monitoring them [13]. Storm posted the prosecutors' letter on Tuesday. "The DOJ is still coming after me with everything it has. They really want to see me convicted," he wrote [15].

Prosecutors had sought a retrial this month. It is scheduled for April 26, 2027 [16], about 20 months after the verdict [28], and goes ahead only if those charges remain pending [19]. Alexey Pertsev, Storm's collaborator on Tornado Cash, was found guilty of money laundering in the Netherlands in 2024; he is out on electronic monitoring while his appeal is pending [25].

What to watch

  • Failla's ruling on the acquittal motion, and whether she treats Ahmed's use of Tornado Cash before his hack as furthering the laundering conspiracy.
  • Any defense reply to the letter distinguishing Ahmed's use from his Manhattan apartment from the agent's deliberate sting transactions in Washington.
  • Whether FinCEN, which said it will keep monitoring mixers, comes back with a narrower definition of mixing to replace the withdrawn 2023 proposal.

Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.

Clarity's read

What the record supports and how the coverage leans. The claims behind it follow.

Reality

Evidence72
Adoption
Not scored
Hype gap+15
Incentives70
Confidence68
Why these scores

Claim ledger

Ranked by verification strength, evidence, and original report placement.

  1. [1]

    Tornado Cash and Bitcoin Fog are coin mixers, software that pools users' crypto to break the on-chain link between where funds come from and where they go.

    Reported Supported Source: DecryptView cited source
  2. [2]

    Federal prosecutors filed a letter on Monday with Judge Katherine Polk Failla in the Southern District of New York arguing that the D.C. Circuit ruling upholding Bitcoin Fog founder Roman Sterlingov's conviction supports trying Storm in Manhattan, and that a Tornado Cash user's transactions from his Manhattan apartment were enough to establish venue on two counts.

    Reported Supported Source: Decrypt, describing the prosecutors' letterView cited source
  3. [3]

    The D.C. Circuit's September 25 ruling affirmed Sterlingov's conviction and 150-month sentence.

    Reported Supported Source: DecryptView cited source
  4. [4]

    In its September 25 ruling, the D.C. Circuit found venue proper in Washington based largely on a sting in which a special agent deposited about $250 worth of Bitcoin into Bitcoin Fog from D.C. and withdrew almost all of it the next day, according to the opinion.

    Reported Supported Source: Decrypt, citing the D.C. Circuit opinionView cited source
  5. [5]

    Shakeeb Ahmed, a Tornado Cash user, testified he accessed the service "in [his] apartment in Manhattan."

    Reported Supported Source: Decrypt, quoting Ahmed's testimony as cited in the letterView cited source
  6. [6]

    Storm's lawyers had argued that Ahmed's funds sat in the pools too briefly to further any conspiracy; the letter counters that his deposit remained for "a couple days," comparable to the agent's in the Bitcoin Fog case.

    Reported Supported Source: Decrypt, describing the letterView cited source
  7. [7]

    Prosecutors argued that even short-lived deposits can help a mixer by increasing the pool of transactions used to obscure the movement of funds, and said that reasoning supports their argument that Ahmed's use furthered the alleged conspiracy.

    Reported Supported Source: Cointelegraph, describing the prosecutors' filingView cited source
  8. [8]

    On the money transmitting count, the letter says the appeals court found venue proper solely because Bitcoin Fog had "served customers in the District," and that Ahmed's testimony shows Tornado Cash did the same in Manhattan.

    Reported Supported Source: Decrypt, describing the letterView cited source
  9. [9]

    Storm's motion for acquittal, which challenges venue among other grounds, was argued in April and remains undecided.

    Reported Supported Source: DecryptView cited source
  10. [10]

    A Manhattan jury convicted Storm in August 2025 of conspiring to operate an unlicensed money transmitting business and deadlocked on money laundering and sanctions charges.

    Reported Supported Source: DecryptView cited source
  11. [11]

    Storm filed his post-trial motion for acquittal in September 2025, arguing that prosecutors failed to prove he intended to help criminals misuse Tornado Cash.

    Reported Supported Source: CointelegraphView cited source
  12. [12]

    In a Treasury notice filed Monday, FinCEN withdrew a 2023 proposal that would have required financial institutions to report transactions involving international crypto mixing, saying the decision was informed by commenters' concerns that its broad definition of mixing "could have a chilling effect on legitimate activity."

    Reported Supported Source: Decrypt, quoting the FinCEN noticeView cited source
  13. [13]

    The FinCEN notice says illicit actors continue to use mixers and that FinCEN will keep monitoring them.

    Reported Supported Source: Decrypt, describing the FinCEN noticeView cited source
  14. [14]

    Storm cited the Treasury Department's announcement withdrawing its proposed crypto-mixer rule, arguing that the government is taking conflicting approaches to crypto privacy tools.

    Reported Supported Source: Cointelegraph, describing Storm's postView cited source
  15. [15]

    Roman Storm, posting the filing on Tuesday, wrote: "The DOJ is still coming after me with everything it has. They really want to see me convicted."

    Reported Supported Source: Roman Storm, on X, as quoted by DecryptView cited source
  16. [16]

    Storm's retrial on the two deadlocked counts is scheduled for April 26, 2027, after prosecutors had sought a start this month.

    Reported Supported Source: DecryptView cited source
  17. [17]

    Prosecutors said the Bitcoin Fog ruling "directly supports" their position in Storm's case.

    Reported Supported Source: Cointelegraph, quoting the prosecutors' filingView cited source
  18. [18]

    For the money-laundering counts, the D.C. Circuit relied on evidence that an undercover agent conducted Bitcoin Fog transactions from his D.C. office.

    Reported Supported Source: CointelegraphView cited source
  19. [19]

    A retrial on the money-laundering and sanctions conspiracy counts on which the jury deadlocked is scheduled for April 26, 2027, if those charges remain pending.

    Reported Supported Source: CointelegraphView cited source
  20. [20]

    Storm contrasted FinCEN's withdrawal notice with the argument prosecutor Ben Arad made at the April hearing.

    Reported Supported Source: DecryptView cited source
  21. [21]

    Cointelegraph describes Roman Storm as a Tornado Cash developer and Roman Sterlingov as the operator of Bitcoin Fog.

    Reported Supported Source: CointelegraphView cited source
  22. [22]

    At the April hearing, Storm's lawyer Brian Klein argued that Ahmed used Tornado Cash before committing his crime and "didn't actually use Tornado Cash for his hack."

    Reported Supported Source: Decrypt, quoting Brian KleinView cited source
  23. [23]

    At the April hearing, prosecutor Ben Arad argued that once Tornado Cash was largely serving criminals, "even the legitimate transactions that went through Tornado Cash became illegitimate."

    Reported Supported Source: Decrypt, quoting Ben AradView cited source
  24. [24]

    Judge Failla pressed Arad on the point, saying "I'm concerned if that's your theory."

    Reported Supported Source: Decrypt, quoting Judge FaillaView cited source
  25. [25]

    Alexey Pertsev, who worked on Tornado Cash alongside Storm, was convicted of money laundering in the Netherlands in 2024 and released to electronic monitoring pending appeal.

    Reported Supported Source: DecryptView cited source
  26. [26]

    The Constitution requires that a crime be tried where at least part of it took place.

    Reported Supported Source: DecryptView cited source
  27. [27]

    Sterlingov's affirmed 150-month sentence equals 12.5 years.

    Derived Supported
  28. [28]

    The April 26, 2027 retrial date falls about 20 months after Storm's August 2025 verdict.

    Derived Supported

Sources

2 independent publishers whose own reporting we read for this story.

  1. cointelegraph.com

    1 article · October 7, 2026

    DOJ invokes Bitcoin Fog ruling in potential blow to Roman Storm acquittal bid
  2. decrypt.co

    1 article · October 7, 2026

    Prosecutors Cite Bitcoin Fog Ruling Against Roman Storm's Venue Challenge

Topics and entities

Topics

  • Crypto privacy regulation
  • Cryptocurrency mixers

Entities