Dragonfly Ventures Cleared in Tornado Cash Case as DOJ Confirms No Charges

Sean Williams
Tornado Cash

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Key Takeaways:

  • DOJ confirms Dragonfly Ventures is not under investigation in the Tornado Cash case.
  • Prosecutors walked back earlier hints at charges after legal pushback.
  • Roman Storm’s trial could set a precedent for open-source developer liability.

Dragonfly Ventures will not face criminal prosecution for its 2020 investment in Tornado Cash, U.S. federal prosecutors confirmed during a court session on July 28. The announcement, made in a Manhattan courtroom during the trial of Tornado Cash co-founder Roman Storm, marks a significant clarification amid growing scrutiny of crypto-related entities.

Dragonfly managing partner Haseeb Qureshi emphasized the unusual nature of the DOJ’s public statement. According to courtroom transcripts shared by Qureshi, prosecutors directly addressed media misreporting and stressed that neither Dragonfly nor its leadership are targets in the investigation.

Prosecutors Walk Back Earlier Hints at Charges

Just days earlier, on July 26, prosecutors had raised the possibility of charges against Dragonfly. This stemmed from the firm’s early investment in Tornado Cash—an open-source privacy protocol that has since been sanctioned by the U.S. Treasury. At the time, Dragonfly had relied on external legal counsel to ensure compliance with anti-money laundering standards.

Qureshi responded strongly, suggesting that the earlier insinuations were an attempt to suppress testimony and violated DOJ norms. He reaffirmed that Dragonfly supports privacy technology built within legal boundaries.

Tornado Cash Case Tests Legal Boundaries for Developers

Roman Storm, who co-founded Tornado Cash in 2019, now faces charges for laundering over $1 billion and violating sanctions tied to North Korea’s Lazarus Group. Storm’s defense hinges on the idea that publishing open-source code is not inherently criminal. The outcome could set a precedent for developer liability in crypto.

Also Read: Tornado Cash Co-Founder Roman Storm Faces 45 Years in Prison as $1 Billion Crypto Laundering Trial Begins

Storm could face up to 45 years in prison if convicted. Meanwhile, civil legal battles and ongoing appeals against the Tornado Cash sanctions continue to shape the future of privacy tools in Web3.

While Dragonfly Ventures emerges unscathed legally, the trial of Roman Storm could redefine the legal framework surrounding open-source software in crypto. As the case nears its conclusion, developers, investors, and regulators alike are watching for a landmark ruling.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses

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