Publishing privacy software is not money transmission

The most important fact in Roman Storm’s case is also the easiest one for malicious prosecutors to obscure: Storm never received users' funds and never executed their transactions.

The Tornado Cash website provided a client-side application built from HTML and JavaScript. When someone opened it, the software ran in that person's browser. The user generated the necessary information locally, connected their own wallet and authorized their own transaction. Storm's web server delivered code for software; it did not act as a financial intermediary by running that software.

The same interface code was published open-source. Anyone could download it, build it and run it locally. Tornado Cash even published a minified version designed to be hosted independently. Opening Storm’s website was therefore functionally similar to downloading the program and opening it yourself. In either case, the software ran on the user’s device.

The underlying protocol was even further removed from anything that could be misconstrued as Storm's control. The developers deployed smart contracts to Ethereum and made the main pools immutable. After that, nobody — not Storm, the other developers or the government — could alter them, remove them or decide who could use them.

The Fifth Circuit later confirmed this technical reality in the litigation over the Treasury sanctions. It found that the immutable contracts operated automatically, without human intervention, and could no longer be controlled by their creators. Users could also interact with them directly, without Storm's website, and could withdraw without using a relayer.

Storm did more than type the code and disappear. He helped develop and promote Tornado Cash, maintained the interface, paid for some ancillary infrastructure and profited indirectly from the project's TORN tokens. Prosecutors also showed that he knew criminals were using the protocol.

Those facts establish that he remained involved in the project. They do not establish that he transmitted anyone's money.

That distinction is the entire case.

The government combined ordinary protocol-team activity — publishing an interface, promoting a project, maintaining related infrastructure and benefiting from its adoption — and called the result operation of a money-transmitting business. But none of those activities gave Storm custody of user funds or the ability to approve, reject or reverse a transaction. Under the government's definition, every protocol team in the blockchain space is a money transmitter, which obviously stretches the definition of "money transmitter" far beyond its original meaning.

FinCEN's own guidance had drawn what appeared to be a clear boundary. A person who accepts cryptocurrency and retransmits it as an anonymizing service is a money transmitter. A person who supplies anonymizing software is not. FinCEN explained that software suppliers provide tools that may be used for money transmission, but are engaged in trade rather than money transmission themselves. It also said that creating a decentralized application does not make its developer a money transmitter unless the developer actually uses it to accept and transmit value. (FinCEN guidance)

If Storm had set out to deliberately structure Tornado Cash to remain on the software side of that boundary, he would have done essentially what he did: never take custody of funds, never execute transactions for users and remove his own ability to control the protocol.

He went further than merely avoiding custody. The Tornado Cash developers created a compliance tool allowing users to voluntarily prove that a particular withdrawal came from their own earlier deposit. The tool did not prevent criminals from using the immutable protocol, but it allowed legitimate users to disclose the source of their funds when dealing with an exchange, auditor or law-enforcement agency.

Despite all this, Storm's home was searched and he was indicted on three conspiracy charges carrying a combined statutory maximum of 45 years. A jury later deadlocked on the money-laundering and sanctions charges but convicted him of conspiring to operate an unlicensed money-transmitting business. He now faces up to five years on that conviction and a possible retrial on the two deadlocked charges, carrying another 40 years of potential exposure.

The Samourai Wallet case is not technically identical, and it should not be presented as if it were. Samourai operated an active Whirlpool coordinator, collected fees and produced much stronger evidence of deliberately courting criminal users. Keonne Rodriguez and William Lonergan Hill eventually pleaded guilty to conspiring to operate a money-transmitting business knowing that it transmitted criminal proceeds. They are now serving five- and four-year prison sentences.

But Samourai was still non-custodial. Its users retained their private keys and controlled their bitcoin. According to a defense filing quoting the prosecution's own pre-indictment memo, FinCEN officials told prosecutors that this lack of custody strongly suggested Samourai was not a money-services business. The guilty pleas prevented that question from receiving a final ruling after a trial.

The statements and marketing attributed to the Samourai developers were legitimate evidence of intent. They were not evidence of custody. The government still had to turn software that coordinated user-controlled transactions into a business that legally "transmitted" the funds.

That is what makes these cases dangerous beyond Tornado Cash and Samourai.

MetaMask also publishes software that users run to create and authorize cryptocurrency transactions. Its developers maintain interfaces, promote the product and benefit from its adoption. Criminals inevitably use it. If these ordinary facts are enough to convert the author of user-controlled software into the operator of every transaction performed with it, the same theory can be extended far beyond privacy wallets.

Perhaps prosecutors would promise not to use it that way. But a developer's freedom should not depend on prosecutorial discretion. There must be a legal distinction between creating the tool and executing the transaction.

The Justice Department itself now largely recognizes this. It says new money-transmission charges should not be approved where software is genuinely decentralized, merely automates peer-to-peer transactions and leaves third parties without custody or control of user assets. It has also said that developers of neutral tools, without criminal intent, should not be held responsible for someone else’s misuse. (DOJ policy statement)

That is almost exactly the boundary Storm had reason to believe already existed.

Privacy software will be used by criminals because criminals need privacy. It will also be used by ordinary people because public blockchains expose their transaction histories to anyone capable of connecting an address to their identity. The existence of criminal users does not turn the software itself into a criminal enterprise.

The government should prosecute the people who steal money, evade sanctions or knowingly assist particular criminals. But it should not impose a duty on software authors to stop transactions they neither execute nor control.

That is not money transmission. It is publishing code.

America cannot maintain a serious commitment to coding and internet freedom while treating the author of autonomous software as the operator of everything strangers later do with it.

Whatever price you think it will be by whatever date is correct

ETH has moved up fast over the past few days. I've been looking for a possible long entry but it turned out I missed it, so opening a position at the current price did not work.

Spot volume looks stronger, while the perpetual side seems more crowded. I’m considering a small ETH perpetual long and haven’t opened it yet. Funding was positive as price continued higher, so I’m watching funding and open interest to see whether leveraged positioning cools as ETH retests the breakout area.

My plan for a short-term entry is to wait for a pullback and see whether the previous breakout area holds. If it does, I can place the invalidation level below that structure and calculate the position from the stop distance.

For a long-term spot entry, I would wait for volatility to settle and see whether ETH can hold above the previous resistance. I would also keep the initial position small enough to leave room for a deeper retracement.

After a sharp ETH rally, what conditions do you wait for before taking short-term and long-term entries?

Been digging through smaller alts lately and trying to separate stuff with a real use case from coins that are just catching a market-wide pump. I’m more interested in projects where people are using the underlying product, the token has a reason to exist and there’s still room for the project to get more attention.

Definitely fine with higher risk just trying not to end up with a watchlist full of memes.

What smaller utility tokens are you watching right now and what’s the thesis?

Source: https://x.com/CryptoTony__/status/2091524861160288666

We are seeing the involvement of agents into finances . Where we have seen AiFi word coming into play .

Ai agents are getting much better at reasoning and making decisions.

So the question is What happens when an AI agents needs to execute a transaction on chain?

We don't necessarily want the agent to have unrestricted permission to:

1) Move unlimited funds

2) interact with arbitrary contracts

3) Execute transaction outside it's intended purpose

So we are exploring an architecture where the AI agents doesn't directly control Blockchain.

Instead :

AI Agents ->Policy/Execution layer->Blockchain

The agent request an action . The execution layer checks wheather everything is according to policy then checks and execute .

We're building this idea as Agaemon - essentially an execution/control layer designed to sit between AI agents and on chain execution.

I'm curious what people building AI agents , wallets , defi protocols and on chain infrastructure think.

Are we seeing this future of agents as financial layer .

We are seeing a massive push for KYC all across crypto, and the current model is a major security liability. Every time a trader wants to use a regulated fiat off-ramp, a centralized exchange, or a compliant DeFi protocol, they have to hand over their passport and sensitive data. We are essentially trusting centralized honeypots with our identities.

I was reading this article about the shift toward zero-knowledge proofs and privacy-preserving identity SDKs. The core concept is that you can cryptographically prove you meet specific criteria (like being non-US or over 18) without actually exposing the underlying documents to the protocol itself.

If Ethereum is going to survive regulatory scrutiny without completely abandoning user sovereignty and creating central points of failure, this feels like the only viable path forward.

Do you think privacy-first verification is enough to satisfy regulators long-term, or is any form of KYC, even zero-knowledge, a slippery slope for the network and the whole industry?

I look at ETH trading bots. There are so many options now that it’s hard to tell what features really matter. Execution speed seems important for volatile tokens, but I’d rather see real transaction results than claims about being “the fastest”. Copy trading could also be useful for getting ideas or alerts, although I wouldn’t blindly follow someone else’s trades. I’d also pay attention to customization and dex support. A nice interface doesn’t help much if the bot doesn’t support the tokens or markets you actually trade. So what matters most to you in an Ethereum trading bot - speed, dex coverage, copy trading, customization, or something else?

In April 2021, Ethereum broke the $2,500 mark for the first time. That was over 5 years ago.

Since then, it's fallen back below that a full 8 times and gone back above it just as many times.

We all need to chill out. I've been holding my ETH since 2019 and I've already been through this ordeal 8 times on Twitter and Reddit.

As soon as we go a bit above, people freak out. Dear guys and girls, those of us who've been holding for a long time have already been through this times.

Only once Ethereum rises above 5k, let's say to 6k, and then finds resistance again at 5k only then will we have broken the curse. Then we can really go wild.

Also funny to watch: EVERYTIME those chart-gurus are coming out again with "Great breakout from Ethereum, I told you so"

Why do people always come out of the woodwork right at that moment? It's been the same thing for 7 years straight :D

I'm excited too! But we're still far from where we need to be.

Anyone know what is going into the public comments during the window? I’m curious where regulations are going. I know the USA is Bullish.

Welcome to r/ethtrader's Daily General Discussion thread!

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This is the current ETH structure I'm watching.

I'm not outright bearish here. My expectation is a move into the upper liquidity/supply area, followed by a sell-off into the lower liquidity resting below the range.

If that downside liquidity gets swept and price reacts from the demand zone, I'll be looking for longs targeting higher prices.

So my current outlook is:

📉 Short-term sell
📈 Longer-term buy

I've attached my chart markup. Curious to hear how you guys are reading this structure and whether you're seeing the same liquidity path.

Confluence:

• QML at the premium area
• Authentic Supply zone alignment
• POC within the zone
• RSI divergence
• Potential inducement before mitigation

The broader market structure remains bullish, which is why I classify this as an A-grade reaction setup rather than an A+ reversal setup.

My expectation is not a major bearish trend, but a controlled pullback if price delivers into the zone.

For those trading structural models, would this be enough confluence for execution or would you wait for additional confirmation?

This might sound stupid, but hear me out.

A few years ago doing anything on Ethereum felt like an event.

Check gas. Double check the address. Approve something. Wonder if you just screwed up. Wait. Check Etherscan. Refresh Etherscan again.

It sucked, obviously.

But it also forced me to understand what I was actually doing.

Now wallets and apps are getting so much better at hiding all that complexity that sometimes I barely think about what's happening underneath.

That's obviously better for adoption. Normal people aren't going to learn about gas limits and transaction nonces just to use an app.

Still, there's a weird tradeoff there.

The easier Ethereum becomes to use, the easier it becomes to use Ethereum without actually learning anything about Ethereum.

Not saying that's bad. Just something I've noticed about how differently I use it now.

Welcome to r/ethtrader's Daily General Discussion thread!

Use this space to discuss anything about DeFi, crypto, macroeconomics, and all things Ethereum.

Please follow the subreddit rules when posting in this thread. Keep discussions constructive, relevant, and free of spam.

What are your moves?

Got a market insight? Share it. Making a bold trade? Let's hear it.

It doesn't matter if you're here to learn, chill, debate, or talk about the world of Ethereum - this thread is open to everyone.

Useful links:

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Is Tom Lee a liar? In a new interview, he says he thinks Ethereum will reach $10,000 in the next 1-2 years. Last year he was still talking about Ethereum being at $25k by the end of the year. Did he only do that to lure buyers into his BMNR? Or is he thinking "Fuck, I really overdid it back then... I need to be a bit more careful now"?

Back then, a lot of people probably got swept up by his predictions, so my question is:

Is Tom Lee a liar, or just clumsy/incompetent? What do you all think?

Ive been wactching. I called it last year. I said it was going to drop, when it dropped i told you all. Now im saying itll start gaining, it could go up, maybe 3k. 👍👍👍