DOJ Drops Bombshell: Why Dragonfly’s Risky Tornado Cash Bet Won’t Trigger Prosecution—What This Means for Crypto Investors Now
Ever wonder how a simple early investment could spiral into a legal frenzy—or maybe not? The U.S. Department of Justice just put a pin in the swirling rumors surrounding Dragonfly Ventures and their 2020 backing of PepperSec, the brains behind Tornado Cash. After some eyebrow-raising courtroom remarks hinted otherwise, the DOJ has now clarified they have no intentions of prosecuting Dragonfly or its principals. This pivot not only preserves the sanctity of open-source privacy tech investments but also stops a potentially chilling precedent from setting in. As the trial around Tornado Cash approaches its climax, the stakes couldn’t be higher—not just for Dragonfly but for the future of privacy and open-source innovation in America. Curious to see how this unfolds? LEARN MORE.
Dragonfly was under consideration for charges related to its 2020 investment in PepperSec, the team behind Tornado Cash, the team said last week.
Key Takeaways
- The DOJ clarified it has no plans to prosecute Dragonfly over its early investment in Tornado Cash.
- The case highlights concerns about the implications for open-source software and privacy rights.
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The US Department of Justice (DOJ) has clarified that it has no plans to prosecute crypto investment firm Dragonfly or its principals for their early investment in Tornado Cash, reversing previous statements made in court, according to Dragonfly Ventures co-founder Haseeb Qureshi.
The DOJ stated during Monday morning’s trial that media reports about potential charges against Dragonfly were inaccurate, confirming that neither the firm nor its executives are targets of the investigation.
In a statement, Qureshi said the DOJ’s public remarks on Friday, which suggested that Dragonfly could face prosecution simply for investing in open-source privacy technology, were not only unprecedented but also a clear breach of DOJ policy.
“They are never allowed to speculate on prosecuting a third party in open court in front of the media,” Qureshi stressed.
The investment firm had backed PepperSec, the developers behind Tornado Cash, in 2020. The case involves Tornado Cash co-founder Roman Storm, who faces charges of money laundering and sanctions violations.
“The prosecutors did this to prevent us from testifying for the defense,” Dragonfly explained. “But even the notion that an investor could be charged would have induced a chilling effect on investment into blockchain and privacy-preserving technologies.”
The trial is approaching closing arguments, expected as early as this week. The outcome will have profound implications for American privacy and open source software, according to Dragonfly.
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