DOJ Considers Charges Against Dragonfly Over Tornado Cash Investment - Unchained

U.S. federal prosecutors are considering charges against executives of crypto venture firm Dragonfly for their 2020 investment in crypto mixer Tornado Cash.

The Department of Justice (DOJ) raised the possibility during the ongoing criminal trial of Tornado Cash cofounder Roman Storm, citing internal emails between Storm and Dragonfly partners Tom Schmidt and Haseeb Qureshi.

Those emails included one where Storm and other Tornado Cash developers asked for feedback on adding KYC to the platform.

Although Storm’s lawyers wanted Schmidt to testify to provide context around those early communications, he invoked his Fifth Amendment rights. It remains unclear whether Schmidt will be granted immunity.

This story is an excerpt from the Unchained Daily newsletter.

Subscribe here to get these updates in your email for free

Qureshi defended Dragonfly’s investment in Tornado Cash on X, also confirming that the firm had been cooperating with the government’s investigation into the crypto mixer after having received a subpoena in 2023.

“We believe the government’s statement in court today was primarily to undermine a defense of Tornado Cash—to make it more difficult for the defense to call Tom to testify on the stand,” said Qureshi.

“We don’t believe the DOJ would actually bring such absurd and groundless charges. But if they do, we intend to vigorously defend ourselves.”