- The DOJ confirmed in court that Dragonfly and its executives are not targets in the Tornado Cash investigation.
- Roman Storm faces trial for laundering and sanctions violations linked to his role in creating Tornado Cash.
- The outcome of Storm’s case may define how open-source developers are treated under criminal liability laws.
Dragonfly Ventures will not face criminal charges related to its 2020 investment in Tornado Cash, according to recent court disclosures. Prosecutors confirmed during a federal trial in Manhattan that Dragonfly and its executives are not targets in the ongoing investigation. The development comes as Roman Storm’s trial approaches closing arguments.
Prosecutors Clarify Misreporting Around Dragonfly
Dragonfly managing partner Haseeb Qureshi stated that the DOJ has officially ruled out charges against the firm. During a July 28 court session, federal prosecutors addressed what they described as misleading public reporting. They clarified that neither Dragonfly nor its principals were under investigation.
Qureshi described the disclosure as unusual, citing the DOJ’s policy to keep such details private. He shared courtroom transcripts to support his account. These transcripts showed the government addressing the issue directly during the trial.
Storm Trial Puts Open-Source Development on Trial
Roman Storm co-founded Tornado Cash in 2019 to enable anonymous crypto transactions using open-source software. He now faces charges including laundering $1 billion and violating U.S. sanctions. Prosecutors claim he facilitated transactions linked to North Korea’s Lazarus Group.
In its defense, Storm claims that the code of protocol is not a criminal actor. According to legal advisors, the ruling may establish a precedent in developer liability. If convicted, Storm could face up to 45 years in prison.
DOJ Previously Hinted at Action Against Dragonfly
On July 26, prosecutors suggested they might pursue charges against Dragonfly for its early investment in Tornado Cash. The firm had invested in the project after receiving outside legal clearance. This led to accusations that the DOJ’s mention of charges was intended to prevent testimony.
Qureshi responded on social media, calling the suggestion a violation of protocol. He said the firm believed in open-source privacy technology. Dragonfly’s legal review had concluded that the project complied with anti-money laundering standards at the time.
Tornado Cash Sanctions and Developer Appeals Continue
In 2022, Tornado Cash was sanctioned by the U.S Treasury over its facilitation of illegal activity. However, recent civil action caused the reversal of such sanctions. Storm is still crowdfunding to pay rising legal fees.
Developers and investors are paying close attention as the case draws nearer to an end. The decision may redefine the laws governing software distribution and digital privacy software.
