Dragonfly Capital, a cryptocurrency venture capital firm (VC), may be facing charges from the US Department of Justice (DOJ) related to its early investment in Tornado Cash, co-founded by Roman Storm.
During a recent court session, Assistant US Attorney (AUSA) Rehn indicated that charges could extend beyond Schmidt, leading to a request to seal the transcript of his comments.
This detail adds another layer to the scrutiny surrounding Dragonfly’s involvement with Tornado Cash which has been scrutinized over the past years for allegedly being used by bad actors to launder “billions of dollars” in illicit funds, including stolen crypto.
Qureshi emphasized that prior to the investment, Dragonfly secured an external legal opinion confirming that Tornado Cash was compliant with existing laws, as outlined by the Financial Crimes Enforcement Network (FinCEN) in 2019.
He underscored that Dragonfly did not have operational control over Tornado Cash, maintained no contact with any malicious users, and consistently encouraged compliance with legal standards among its portfolio companies.
He emphasized that Dragonfly has fully cooperated with the Department of Justice’s investigation, stating that the firm has never been a target of the inquiry and has always adhered to legal guidelines.
In light of the potential charges, Qureshi expressed confidence in Dragonfly’s legal standing, asserting that any attempts to prosecute the firm would be unfounded and contrary to the facts.
He noted that the government’s statements in court could be aimed at undermining Tornado Cash’s defense, making it more challenging for Schmidt to testify.
Featured image from DALL-E, chart from TradingView.com
