tl;dr
Dragonfly managing partner Haseeb Qureshi announced that the U.S. Department of Justice will not bring criminal charges against Dragonfly or its principals as the federal trial of Tornado Cash co-founder Roman Storm nears conclusion. The DOJ's public clarification, unusual since target information i...
Dragonfly managing partner Haseeb Qureshi revealed that the U.S. Department of Justice (DOJ) will not bring criminal charges against the crypto venture firm as Tornado Cash co-founder Roman Storm’s federal trial in Manhattan neared its conclusion. Qureshi, whose investment firm backed several blockchain startups, shared that federal prosecutor Nathan Rehn informed the court on July 28 that neither Dragonfly nor its principals were targets of the department’s investigation.
He described the public clarification as “unprecedented” and “a clear violation of DOJ policy,” highlighting that the Justice Department usually keeps target information confidential. This development followed Qureshi’s public criticism of the DOJ for targeting Dragonfly for backing Tornado Cash in 2020, as part of Storm’s trial.
Roman Storm co-founded Tornado Cash in 2019 as an open-source protocol designed to anonymize cryptocurrency transactions. He is charged with laundering more than $1 billion and violating U.S. sanctions against North Korea’s Lazarus Group. The trial began on July 14 in U.S. District Court in Manhattan, where blockchain tracing experts and former Tornado Cash users have testified. Closing arguments are expected later this week.
Tornado Cash was added to the U.S. Treasury Department’s sanctions list in August 2022, marking the first instance a software protocol was sanctioned. Prosecutors allege that Storm personally approved transactions for illicit actors, while defense attorneys argue that the protocol’s code, rather than its creator, should be held responsible.
Dragonfly invested in Tornado Cash in 2020 after securing an outside legal opinion confirming the mixer’s compliance with U.S. anti-money-laundering guidance issued by the Financial Crimes Enforcement Network (FinCEN). The trial’s outcome could reshape accountability standards for open-source developers concerning user activity.
If convicted, Storm faces up to 45 years in prison, a sentence that has raised concerns about potentially chilling innovation in privacy-enhancing tools. Qureshi emphasized: “With that behind us, the focus should remain on Roman Storm’s trial, which is now nearing closing arguments as soon as this week. Its outcome will have massive implications for open-source software and privacy rights in America.”