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Commissioner Peirce’s Remarks at SEC Speaks; Tornado Cash Developer Case Update

Commissioner Peirce’s Remarks at SEC Speaks

What happened?

Last Tuesday, Securities and Exchange Commission (SEC) Commissioner Hester Peirce delivered remarks at SEC Speaks program during which she revisited the notion of the SEC's regulatory "secret garden," detailing the maze of staff guidance related to digital assets that broadly shapes securities laws without undergoing formal rule-making processes. “Nobody can challenge these diktats because they are not final agency action, but compliance is mandatory for an entity wishing to avoid SEC delays, denials, and enforcement and examination scrutiny. So everybody silently complies.”

Commissioner Peirce also criticized the reduction of genuine engagement between the SEC and the public, clarifying that “[t]he Commission—not the staff or market participants—is to blame.” She proposed that the “Commission should think about each rule proposal as an opportunity to foster a public discussion with the goal of developing the best solution to a carefully identified problem, not as the opening bid in a hard-driving negotiating strategy designed to force a cowed public to accept a slightly less onerous—though perhaps still unworkable—final rule.” 

Lastly, Commissioner Peirce proposed several solutions to restore balance between the SEC and market participants. ​​She appealed to industry worries, and urged them to keep an open dialogue with the Commission: ”Innovation is not linear, and the path to launching an innovative idea will not always be straight. Try to see things from the SEC’s vantage point and to learn from staff’s concerns, but push back when those concerns are not legally grounded.”

What does this mean?

Commissioner Pierce’s comments highlight concerns—both internal and external—about the lack of a comprehensible policy approach to digital assets. This has led to uncertainty and instability in the digital asset market, affecting how companies plan their compliance efforts and product offerings. The SEC should seriously consider Commissioner Peirce’s remarks to restore public-private engagement to foster innovation and consumer protection. 

Tornado Cash Developer Case Update 

What happened? 

On March 29, Tornado Cash developer Roman Storm filed a motion to dismiss the charges against him.  Last year, the US Department of Justice (DOJ) charged Roman Storm and Roman Semenov for allegedly operating an unlicensed money transmitting business, conspiring to commit money laundering, and violating sanctions through their work on the Tornado Cash “service.” 

The motion seeks dismissal of the anti-money laundering charges and charges that he violated the International Emergency Economic Powers Act (IEEPA). First, Storm contends that the indictment fails to show that the Tornado Cash protocol is a “financial institution” under the Bank Secrecy Act (BSA). Based on similar reasoning, Storm argues that the conspiracy charge to commit money laundering should be dismissed because no “financial transaction” was conducted involving a “financial institution.” Moreover, Storm did not have the specific intent to commit money laundering, based on the fact that Storm’s intent to build the Tornado Cash protocol occurred far before any third-party criminal activity using the software happened. With respect to the IEEPA violation charge, Storm argues that the indictment fails to allege that he willfully conspired to evade sanctions and argues that software falls within the statutory informational material exception.   

What does this mean? 

This is an important case for software developers in every industry because it tests the limits of a developers’ liability when software they’ve developed is later used by unrelated third-parties to engage in illicit conduct. We filed a brief in this case last Friday, which we’ll summarize next week!


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