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

Prosecutors Leverage Bitcoin Fog Ruling to Reinforce Venue in Roman Storm Case

In a move that underscores how precedent can shape high‑profile crypto prosecutions, federal prosecutors have cited the U.S. Court of Appeals for the D.C. Circuit’s decision upholding the conviction of Bitcoin Fog founder Roman Sterlingov to argue that Roman Storm’s trial in Manhattan was proper. The letter, filed with Judge Katherine Polk Failla in the Southern District of New York, hinges on the idea that a user’s activity within a city can establish venue, even when the underlying illicit act involves a global, decentralized service.

The Legal Thread: From Bitcoin Fog to Tornado Cash

The D.C. Circuit’s September 25 ruling affirmed Sterlingov’s 150‑month sentence, citing a sting operation in which a federal agent deposited roughly $250 worth of Bitcoin into Bitcoin Fog from Washington, D.C., and withdrew almost all of it the next day. The court held that the agent’s actions—depositing and withdrawing in the District—made Washington the proper venue for the money‑laundering conspiracy charge.

Prosecutors now argue that a similar logic applies to Storm. In his case, a Tornado Cash user—Shakeeb Ahmed—testified that he accessed the mixer from his Manhattan apartment and that his funds remained in the pool for a couple of days. The letter contends that this “in‑city” activity satisfies the constitutional requirement that a crime be tried where at least part of it occurred.

The argument is two‑fold:

1. Money‑laundering conspiracy – The court’s reasoning that the agent’s deposit and withdrawal in Washington established venue is mirrored by Ahmed’s deposit and brief stay in Manhattan.
2. Money‑transmitting business – The D.C. Circuit noted that Bitcoin Fog served customers in the District. Prosecutors point to Tornado Cash’s presence in Manhattan, as evidenced by Ahmed’s testimony, to argue that the venue for the money‑transmitting count should likewise be New York.

Storm’s Counter‑Narrative and the FinCEN Withdrawal

Storm, who was convicted in August 2025 of operating an unlicensed money‑transmitting business and faced deadlocked charges on money laundering and sanctions, has taken to social media to highlight a seemingly contradictory development: FinCEN’s withdrawal of a 2023 proposal that would have required financial institutions to report transactions involving international crypto mixing.

The Treasury notice, released the same day as the prosecutors’ letter, cites concerns that a broad definition of mixing could “chill legitimate activity.” Storm’s tweet frames this as evidence that regulators are wary of over‑broad enforcement, contrasting it with the prosecutor’s assertion that once Tornado Cash “served criminals,” all transactions—legitimate or not—became illegitimate.

Judge Failla, who presided over the April hearing, questioned the prosecutor’s logic, asking whether the mere presence of criminal activity on a platform automatically invalidates legitimate transactions. This exchange highlights a broader debate: how to balance anti‑money‑laundering enforcement with the need to preserve lawful crypto use.

What the Ruling Means for the Broader Crypto Landscape

If the court accepts the prosecutors’ argument, it could set a precedent that any user’s activity within a jurisdiction—no matter how brief—can establish venue for crimes involving decentralized services. This would give prosecutors a powerful tool to target suspects in high‑profile cases, even when the underlying infrastructure is global.

Conversely, the FinCEN withdrawal signals that regulators are cautious about imposing blanket reporting requirements that could stifle legitimate crypto innovation. The tension between enforcement and innovation is likely to intensify as lawmakers grapple with how to regulate mixers without driving them underground.

Practical Takeaways for Crypto Operators

1. Know Your Venue – If you’re using a mixer or any decentralized service, be aware that local activity can implicate you in that jurisdiction’s legal framework.
2. Maintain Transparency – While mixers are designed to obfuscate, providing clear, lawful documentation of your transactions can help demonstrate legitimate use if you’re ever scrutinized.
3. Stay Updated on Regulatory Changes – The FinCEN notice shows that regulatory stances can shift. Keep an eye on Treasury and FinCEN announcements to anticipate potential reporting obligations.
4. Legal Counsel Matters – In complex cases involving multiple jurisdictions, early engagement with experienced legal counsel can help navigate venue challenges and potential defenses.

Closing Thoughts

The intersection of crypto technology and traditional legal frameworks continues to evolve. The prosecutors’ use of the Bitcoin Fog precedent to defend the Manhattan venue in Storm’s case illustrates how courts can apply established principles to new contexts. Meanwhile, FinCEN’s cautious approach to mixer regulation reminds stakeholders that the line between legitimate innovation and illicit activity is often thin—and subject to change.

As the legal landscape matures, crypto users and operators must remain vigilant, ensuring compliance while preserving the benefits of decentralization.

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TL;DR: Prosecutors used a Bitcoin Fog appeal ruling to argue that Roman Storm’s trial in Manhattan was proper, citing a user’s brief activity in the city, while Storm highlighted FinCEN’s withdrawal of a mixer‑reporting rule to question the breadth of such enforcement.