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Tornado Cash Dev Roman Storm Could Face Retrial

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Tornado Cash Dev Roman Storm Could Face Retrial

A U.S. federal prosecutor has requested to retry the co-founder of the privacy-focused crypto protocol months after he received a mixed verdict.

A United States federal prosecutor has requested to retry Roman Storm, the co-founder of decentralized cryptocurrency mixer protocol Tornado Cash, according to court documents submitted on March 9.

In a letter to U.S. district judge of the District Court for the Southern District of New York, Katherine Polk Failla, U.S. Attorney Jay Clayton said the government wants to retry Storm on two charges.

Back during his highly publicized trial this summer, Storm received a guilty verdict on the lesser of the three charges brought against him — operating an unlicensed money-transmitting business. But the jury was unable to come to a verdict on the other two, namely violating U.S. sanctions and engaging in money laundering.

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The U.S. Attorney said in the retrial request that he expects the trial on the two remaining counts to take three weeks, and asks that it begin in October of this year.

Storm took to X today in response to the retrial request, writing:

“A jury of 12 Americans heard 4 weeks of evidence and deadlocked: no verdict on money laundering, and no verdict on sanctions violations. The government’s response? Try again to make writing code a crime.”

Storm also noted in his X post that if found guilty on the two counts, he could face up to 40 years in prison. He also referenced recent regulatory shifts in the U.S. that have come out in defense of decentralized protocol developers.

Specifically, he noted, a new report from the U.S. Department of the Treasury to Congress this week states, “Lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains.”

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Also noted by Storm in today’s X post, last March, the U.S. Treasury removed Tornado Cash from its list of sanctioned entities, as The Defiant reported at the time. The protocol had been banned in the U.S. since 2022.

The US v Roman Storm

Tornado Cash is a non-custodial protocol that lets users anonymize their transactions on multiple Ethereum Virtual Machine-compatible blockchains. The platform and Storm personally have received overwhelming support from the crypto industry for their focus on privacy throughout a multi-year legal battle with the U.S. government.

Storm was first indicted by the U.S. government in August 2023. The U.S. Department of Justice alleged that Storm and his fellow co-founder Roman Semenov were aware of the platform’s usage by criminal organizations for laundering illicit funds, and claimed that the two are responsible for more than $1 billion in laundered crypto.

Prosecutors also alleged that the two developers in some cases helped launder funds, “including by laundering hundreds of millions of dollars on behalf of a state-sponsored North Korean cybercrime group sanctioned by the U.S. government,” referring to the notorious Lazarus Group.

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Semenov has yet to face trial for the alleged charges, and remains on the FBI’s wanted list since 2023, when the indictment came out and a federal warrant for his arrest was issued.

In a motion to dismiss filed by Storm’s lawyers in 2024, the developer pleaded not guilty, and argued that he “is a developer, and his only agreement, together with the members of his U.S.-based company, was to build software solutions to provide financial privacy to legitimate cryptocurrency users.”

As the Defiant previously reported, the outcome of Storm’s legal battle could significantly influence the future of DeFi, especially in the U.S., and set a precedent for how responsible DeFi developers are for how users interact with protocols.

Last February, the third founding developer of Tornado Cash, Alexey Pertsev was released from prison to house arrest in the Netherlands, where is serving an over five year sentence for money laundering related to Tornado Cash. He was arrest in 2022 and found guilty in 2024. After his most recent attempt to appeal the decision in June, Pertsev was allowed to remove his ankle monitor, though his movement remains resitricted to The Netherlans and he is unable to work, per an X post from the dev in October.

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In November of last year, the two co-founders of another crypto mixer protocol, Samourai Wallet, were found guilty in a U.S. federal court of “a conspiracy to operate a money transmitting business in which they knowingly transmitted criminal proceeds.”

Samourai Wallet’s Keonne Rodriguez and William Lonergan Hill were sentenced to five and four years in prison, respectively.

This article was generated with the assistance of AI workflows.

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MSTR and ASST have big upside after major declines, says B. Riley

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Michael Saylor hints at another bitcoin purchase despite market turmoil

Investment bank B. Riley initiated coverage of bitcoin treasury firms Strategy (MSTR) and Strive (ASST) with buy ratings, setting price targets of $175 and $12, respectively.

Strategy was trading at $141.82 at publication time, Strive at $8.67.

The sector was pressured after bitcoin fell more than 45% from about $126,000 in October 2025 to roughly $69,000 in early March 2026, compressing market-to-NAV premiums and slowing the equity issuance that had fueled bitcoin accumulation, the bank said in a report published Monday.

The correction has weighed on crypto-linked equities and funds. The decline in BTC prices and broader risk-asset sentiment has contributed to volatility in shares of companies exposed to digital assets, including corporate bitcoin holders and crypto-focused investment vehicles.

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Strategy remains the largest bitcoin treasury company, holding 738,731 BTC. The company, led by Executive Chairman Michael Saylor, made a massive bitcoin purchase last week, adding 17,994 bitcoin to its holdings for a total cost of $1.28 billion, or $70,946 per coin.

The company has built a “digital credit platform” combining common equity and five series of perpetual preferred shares yielding 8% to 11.5%, backed by about $2.25 billion in cash reserves, according to analyst Fedor Shabalin.

The analyst noted that Strategy’s shares trade around 1.2 times mNAV, well below a roughly 3.4x peak in 2024, presenting an attractive entry point.

mNAV is a metric used to value bitcoin treasury companies by comparing a company’s market capitalization to the value of its underlying bitcoin holdings and related assets.

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Strive, meanwhile, combines a bitcoin treasury of about 13,100 BTC with an asset-management business overseeing roughly $2.5 billion. The analyst pointed to its low leverage, a preferred share yield of about 12.5%, and a valuation discount, with the stock trading at around 0.9x modified NAV.

Preferred securities issued by the companies could attract yield-focused investors, given that the payouts exceed many traditional income alternatives, the report added.

Read more: Strategy logs record STRC equity issuance on Monday, buys estimated 1,420 bitcoin

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DeFi lending platform Aave sees $27 million liquidations after wstETH price glitch

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(AAVE liquidations over last 24 hours/ Chaos Labs)

About $27 million was liquidated on the decentralized lending platform Aave over the last 24 hours, in what some market participants say may have been caused by a temporary pricing issue involving the token wstETH.

Blockchain data flagged by risk-management firm Chaos Labs shows a spike in liquidations in the past 24 hours. Some observers believe the event may have been linked to a price update in an oracle system that Aave uses to determine the value of collateral.

(AAVE liquidations over last 24 hours/ Chaos Labs)
(AAVE liquidations over last 24 hours/ Chaos Labs)

Oracles are services that feed price data from the outside world into blockchain applications. Lending protocols like Aave rely on them to decide when a borrower’s collateral is no longer sufficient to back their loan — at which point the position can be liquidated.

While such scenarios are rare, most recently, a price-oracle setup misconfigured by DeFi lender Moonwell briefly valued Coinbase Wrapped ETH (cbETH) at about $1 instead of roughly $2,200, leaving the protocol with nearly $1.8 million in bad debt.

In Aave’s case, some say the issue may have involved wstETH, a token issued by Lido that represents staked ether. Because it accrues staking rewards over time, one wstETH is typically worth slightly more than one ETH.

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According to a post from LTV Protocol on X, at the time of the liquidations, Aave’s oracle appeared to value wstETH at roughly 1.19 ETH, while the broader market valued it closer to 1.23 ETH.

Volume remained relatively low for wstETH trading pairs, with just $10 million being traded over the past 24 hours, so it is unlikely any astute traders capitalized on the pricing mismatch before it snapped back.

Aave spokesperson didn’t reply to CoinDesk’s request for comments.

(24-hour trading volume of wstETH/ CoinMarketCap)
(24-hour trading volume of wstETH/ CoinMarketCap)

Earlier in the day, risk firm LlamaRisk briefly published a post on the AAVE forum, attributing the liquidations to an issue with Chaos Labs’ risk oracle, before deleting it.

Chaos Labs later said the underlying oracle itself reported the correct market values, and that the liquidations were instead triggered by a configuration issue in the protocol’s CAPO risk oracle, which is designed to place limits on how quickly the value of yield-bearing tokens such as wstETH can increase.

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According to Chaos Labs, the incident was caused by a mismatch between stale parameters stored in a smart contract, including a reference exchange rate and its associated timestamp. Because those values were not updated in sync, the CAPO system temporarily calculated a maximum allowed exchange rate that was lower than the real market value of wstETH.

That effectively caused the protocol to treat wstETH as about 2.85% less valuable than it actually was, pushing some borrowing positions below their safety thresholds, triggering liquidations.

Chaos Labs said the protocol incurred no bad debt, though liquidators — traders or bots that repay risky loans in exchange for discounted collateral — captured roughly 499 ETH in liquidation bonuses and profits from the temporary price discrepancy.

A Lido contributor told CoinDesk, “We are aware of the liquidations due to an incorrect wstETH to USD price reported by this oracle mechanism. The cause has nothing to do with wstETH itself, how it works or the Lido protocol which continue to operate normally.”

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Oliver Knight contributed reporting to this story.

Read more: Aave governance rift deepens as major governance group exits $26 billion DeFi protocol

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Kalshi Suffers Court Loss in Ohio over Sports Betting Lawsuit

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Law, CFTC, Court, Kalshi, Prediction Markets

The prediction markets platform argued for an injunction against Ohio authorities, claiming that federal commodities laws superseded state laws on sport event contracts.

An Ohio federal court has denied a motion filed by prediction markets platform Kalshi for a preliminary injunction against Ohio state authorities over allegations that the company was operating in violation of gambling laws.

In an order filed Monday, US District Court for the Southern District of Ohio Chief Judge Sarah Morrison denied Kalshi’s request for an injunction that would have blocked the Ohio Casino Control Commission and state attorney general from regulating contracts on the platform, specifically for sports betting.

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According to the judge, Kalshi had failed to show that the sports event contracts available on the platform were subject to the “exclusive jurisdiction” of the Commodity Futures Trading Commission (CFTC).

“Even if this Court were to find that sports-event contracts are swaps subject to the CFTC’s exclusive jurisdiction, Kalshi has not shown that the [Commodity Exchange Act, or CEA] would necessarily preempt Ohio’s sports gambling laws,” said the opinion and order, adding:

“Kalshi argues that Ohio’s sports gambling laws are field and conflict preempted by the CEA when it comes to sports-event contracts traded on its exchange […] Kalshi fails to establish that Congress intended the CEA to preempt state laws on sports gambling.”

Law, CFTC, Court, Kalshi, Prediction Markets
Source: Courtlistener

The denial pushed back against the narrative from CFTC Chair Michael Selig, who said in February that the federal regulator had “exclusive jurisdiction” over prediction markets and threatened lawsuits against any authority claiming otherwise. Kalshi and prediction platforms face lawsuits in other US states over similar allegations involving unlicensed sports betting.

“This Court does not endeavor to explain why the CFTC has not exercised its authority […] with respect to the sports-event contracts,” said the Monday filing in Ohio. “But the agency’s inaction is not proof that the sports-event contracts are regulated by or permissible under the CEA—and the Court has concluded they are not.”

Related: CFTC chair backs blockchain-based prediction markets as ‘truth machines’

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In a statement to Cointelegraph, a Kalshi spokesperson said that the company “respectfully disagree[d] with the Court’s decision, which splits from a decision from a federal court in Tennessee just a few weeks ago, and will promptly seek an appeal.”

CFTC guidance on prediction markets could be looming

Last week, Selig said that the federal regulator was working to provide guidance regarding prediction markets “in the very near future.” The CFTC chair is the sole Senate-confirmed commissioner in a panel normally consisting of five people.

Magazine: The debate over Bitcoin’s four-year cycle is over: Benjamin Cowen

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