DOJ: No Prosecution for Dragonfly Over Tornado Cash Investment

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.

The US Department of Justice (DOJ) has stated it will not prosecute crypto investment firm Dragonfly or its principals for their early investment in Tornado Cash. This clarification reverses previous statements made in court, according to Dragonfly Ventures co-founder Haseeb Qureshi.

During Monday morning’s trial, the DOJ stated that media reports about potential charges against Dragonfly were inaccurate, confirming that neither the firm nor its executives are targets of the investigation.

Qureshi mentioned that the DOJ’s public remarks on Friday, which suggested Dragonfly could face prosecution for investing in open-source privacy technology, were unprecedented and a 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 supported 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 nearing closing arguments, expected this week. The outcome could significantly impact American privacy and open-source software, according to Dragonfly.

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