Bitcoin Fog Appeals Ruling Becomes Key to Prosecutors’ Case on Roman Storm’s New York Trial Venue

Table of Contents

• You might want to know


• Prosecutors’ Venue Argument


• The Manhattan Connection


• FinCEN’s Withdrawn Proposal


• Case Status and Related Proceedings


• Key Insights Table


• Afterwards...

You might want to know

• How does the Bitcoin Fog appeals ruling support prosecutors’ argument that Roman Storm’s case belongs in Manhattan?


• What does FinCEN’s withdrawal of a proposed crypto-mixing rule add to the debate over Tornado Cash and legitimate activity?

Prosecutors’ Venue Argument

Federal prosecutors have asked Judge Katherine Polk Failla, who is overseeing the case against Roman Storm, to consider an appeals court ruling involving Bitcoin Fog. They say the decision affirming the conviction of Bitcoin Fog founder Roman Sterlingov supports their position that Storm’s case was properly tried in New York. Their filing focuses on where alleged conduct connected to the charged offenses took place.

Tornado Cash and Bitcoin Fog are cryptocurrency mixers: services that pool users’ digital assets in an effort to obscure the on-chain link between the source of funds and their destination. The legal dispute is not simply about how these tools operate. It also concerns whether prosecutors can establish that at least part of an alleged crime occurred in the district where a trial is held.

The Constitution requires a criminal case to be tried in a location where at least part of the charged offense took place. Storm’s motion for acquittal challenges venue, among other grounds. His lawyers argued the motion at a hearing in April, and Judge Failla has not yet decided it.

The prosecutors’ letter was filed Monday in the Southern District of New York. It cites a September 25 ruling from the D.C. Circuit, which affirmed Sterlingov’s conviction and 150-month sentence. In that case, the appeals court found that Washington was a proper venue, relying largely on a sting operation involving a special agent.

According to the opinion, the agent deposited about $250 worth of Bitcoin into Bitcoin Fog from D.C. and withdrew almost all of it the next day. Prosecutors rely on the court’s reasoning to argue that activity involving a user located in Manhattan can similarly support venue in New York.

The central point of the filing is that a user’s location and interaction with a mixer may help establish where an alleged conspiracy or money-transmitting activity occurred. The court must assess that argument in light of the specific charges, the evidence, and the applicable constitutional venue requirement.

The Manhattan Connection

The letter centers on Shakeeb Ahmed, a Tornado Cash user who testified that he accessed the service “in [his] apartment in Manhattan.” Prosecutors argue that this testimony connects Tornado Cash activity to the district and supports trying the relevant counts there.

Storm’s lawyers had argued that Ahmed’s funds remained in the mixer’s pools too briefly to advance a conspiracy. Prosecutors respond that the deposit stayed in the pool for “a couple days,” which they describe as comparable to the period in the Bitcoin Fog sting. Their argument is that the duration and location of the activity can be considered alongside the broader evidence of the alleged offenses.

At the April hearing, Storm’s lawyer Brian Klein disputed the significance of Ahmed’s use of Tornado Cash. Klein argued that Ahmed used the service before committing his crime and “didn’t actually use Tornado Cash for his hack.” This distinction matters to the defense’s position that the alleged criminal conduct cannot be attributed to, or geographically connected through, the mixer in the way prosecutors suggest.

The prosecutors’ letter addresses the money laundering conspiracy count and the money transmitting count. On the money-transmitting charge, it says the appeals court found venue proper because Bitcoin Fog had “served customers in the District.” Prosecutors argue that Ahmed’s testimony shows Tornado Cash likewise served a user in Manhattan.

That comparison does not itself decide Storm’s motion. The Bitcoin Fog ruling concerns a different service, defendant, record, and set of charges. The judge will need to determine whether the facts in Storm’s case satisfy the governing legal standard and whether the evidence links the alleged conduct to the Southern District of New York.

FinCEN’s Withdrawn Proposal

Storm also drew attention to a Treasury notice filed Monday, the same day as the prosecutors’ letter. The notice said the Financial Crimes Enforcement Network (FinCEN) had withdrawn a 2023 proposal that would have required financial institutions to report transactions involving international crypto mixing.

FinCEN said its decision was informed by concerns submitted by commenters. In particular, commenters warned that the proposal’s broad definition of mixing “could have a chilling effect on legitimate activity.” The withdrawal is relevant to the wider policy discussion because it reflects concerns about how regulatory definitions could affect lawful users as well as efforts to identify illicit financial activity.

The notice did not state that mixing services pose no risks. It also says illicit actors continue to use mixers and that FinCEN will continue monitoring them. The agency’s action therefore describes a change in the proposed reporting approach, rather than an abandonment of scrutiny over the sector.

Storm contrasted the notice with an argument made by prosecutor Ben Arad during the April hearing. Arad argued that once Tornado Cash was largely serving criminals, “even the legitimate transactions that went through Tornado Cash became illegitimate.” Judge Failla pressed him on that reasoning, saying, “I’m concerned if that’s your theory.”

The exchange highlights a broader question in the case: how should courts distinguish between the design or use of a mixing service and the conduct of particular users? The legal analysis may depend on the charges, the evidence of knowledge and intent, and how prosecutors define the alleged conspiracy. FinCEN’s notice informs the policy context, but it does not resolve the court’s assessment of Storm’s criminal charges.

Storm posted the filing in a tweet on Tuesday and wrote that the Department of Justice was “still coming after me with everything it has.” In the same post, he said, “They really want to see me convicted.” The statement reflects Storm’s view of the prosecution; it is not a judicial finding about the merits of the case.

Case Status and Related Proceedings

A Manhattan jury convicted Storm in August 2025 of conspiring to operate an unlicensed money transmitting business. The jury deadlocked on money laundering and sanctions charges. The pending motion for acquittal challenges the conviction on several grounds, including venue, while the prosecutors’ latest letter specifically seeks to defend the location of the trial on the relevant counts.

A retrial on the two counts that resulted in a deadlock is scheduled for April 26, 2027. Prosecutors had sought to begin the retrial this month. The difference between the planned schedule and the requested timing is part of the procedural history, but the stated retrial date remains April 26, 2027.

The case also sits within a broader set of proceedings connected to Tornado Cash. Alexey Pertsev, who worked on Tornado Cash alongside Storm, was convicted of money laundering in the Netherlands in 2024. He was released to electronic monitoring while his appeal is pending. His case is separate from Storm’s U.S. proceedings, and the outcome in one jurisdiction does not by itself determine the result in the other.

For now, the key unresolved question is whether Judge Failla accepts the prosecutors’ comparison between the Bitcoin Fog venue ruling and the evidence concerning Ahmed’s use of Tornado Cash in Manhattan. The decision could clarify how courts evaluate location-based evidence when alleged activity involves decentralized software and users interacting with a service from different places.

Key Insights Table

Afterwards...

The dispute illustrates the challenges courts face when applying traditional rules about the location of a crime to digital services. A user can access software from one place, while transactions may be recorded across distributed networks and assets may pass through pooled systems. Future cases will likely examine how location, user conduct, service design, and alleged intent fit together under existing criminal law.

Further exploration of blockchain analytics, privacy-preserving technologies, and the limits of transaction tracing could help courts and policymakers assess digital evidence more consistently. Clearer standards may also help distinguish lawful privacy practices from conduct that violates financial or criminal laws, without assuming that every user or transaction has the same purpose.

The next important developments will come from judicial rulings and carefully defined policy frameworks that balance effective enforcement with due process, privacy, and legitimate financial activity. The decision on Storm’s venue challenge may contribute to that discussion, but it will not, by itself, settle every legal or regulatory question surrounding crypto mixers.