As the prosecution of Tornado Cash developer Roman Storm unfolds, the government’s theory is colliding with Trump administration policies that have left prosecutors arguing Storm should have followed compliance rules they’re no longer allowed to say he was required to follow.

That contortion is just one of several flaws in a prosecution that has been plagued by embarrassing blunders, including misattributing to a Tornado Cash developer text messages that were actually sent by a reporter.

Not only that, the “crypto recovery” service used by the victim may have been one identified by the FBI as a scam known for producing “incomplete or inaccurate tracing report[s]” (though this may be a separate company sharing a name, or impersonating a legitimate business).

Prosecutors have tried to recover the testimony by bringing in an FBI agent to testify that the scam victim’s funds were sent to Tornado, using an accounting practice known as LIFO. Problem is, that doesn’t really work for crypto tracing — as the agent acknowledged.

The prosecution's flailing attempts to navigate around the Blanche memo exemplify the incoherence of the Trump administration's approach to cryptocurrency enforcement: carveouts for powerful allies while continuing aggressive prosecutions to avoid appearing soft on cybercrime.

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