DOJ Weighs Criminal Charges Against Dragonfly Capital Employees Over Tornado Cash
Prosecutors are considering criminal charges against employees of Dragonfly Capital, including general partner Tom Schmidt, related to their 2020 investment in Tornado Cash, a privacy tool. This discussion occurred during the trial of Tornado Cash developer Roman Storm, who faces serious charges including conspiracy to commit money laundering.
Key points include:
- The prosecution introduced messages between Storm and Dragonfly partners, suggesting they profited from Tornado Cash and modified its interface.
- Schmidt declined to testify after prosecutors did not grant him immunity, citing potential future prosecution.
- Prosecutor Nathan Rehn confirmed that only Schmidt and one other individual are being considered for prosecution.
- Dragonfly's managing partner Haseeb Qureshi defended the firm’s investment, emphasizing their commitment to privacy rights and claiming no control over Tornado Cash.
- Qureshi stated that charging a venture firm for a portfolio company's misconduct would be unprecedented and harmful to crypto investments.
- He affirmed Dragonfly's full cooperation with the ongoing investigation, which began in 2023.
The judge agreed to seal parts of the court transcript regarding these discussions.