{"id":38919,"date":"2025-07-26T13:01:54","date_gmt":"2025-07-26T13:01:54","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=38919"},"modified":"2025-07-26T13:01:54","modified_gmt":"2025-07-26T13:01:54","slug":"dragonfly-investor-might-face-doj-charges-over-tornado-cash-bet","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=38919","title":{"rendered":"Dragonfly Investor Might Face DOJ Charges Over Tornado Cash Bet"},"content":{"rendered":"
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Dragonfly Capital could be in serious trouble. A federal prosecutor told a New York court that the Department of Justice is weighing criminal charges against one of the firm\u2019s general partners in connection with their investment in Tornado Cash. It\u2019s a surprising twist in the trial of Tornado Cash developer Roman Storm <\/span>and raises<\/span> a bigger question: can investors be held legally responsible for what their portfolio projects do?<\/span><\/p>\n

Legal Spotlight Shines on Tom Schmidt<\/span><\/h2>\n

Tom Schmidt, a partner at Dragonfly, found himself mentioned in court when the prosecutor casually noted that charges against him were still <\/span>on the table<\/span>. <\/span>That comment was quickly sealed<\/span> from the record, but the message was clear. For now, he hasn\u2019t <\/span>been charged<\/span>, but he\u2019s under serious scrutiny. This kind of attention on a VC investor is rare, especially when they weren\u2019t directly involved in day-to-day operations.<\/span><\/p>\n

\"Dragonfly
Source: Shutterstock<\/figcaption><\/figure>\n

Emails from Dragonfly Surface in Court<\/span><\/h2>\n

One reason the DOJ is taking this angle may be the internal emails now in evidence. Messages from 2020 show Dragonfly discussing compliance features with Tornado Cash\u2019s developers, including things like KYC. That might cut both ways. On one hand, it shows Dragonfly was aware of regulatory concerns. <\/span>On the other hand<\/span>, <\/span>it<\/span> could be used<\/span> to argue <\/span>they<\/span> knew the risks and went ahead anyway.<\/span> Schmidt, for his part, refused to testify, invoking the Fifth Amendment.<\/span><\/p>\n

Dragonfly Isn\u2019t Backing Down<\/span><\/h2>\n

Haseeb Qureshi, another managing partner at Dragonfly, has already responded publicly. He called the idea of criminal charges against an investor absurd. According to him, Dragonfly got legal advice before <\/span>investing<\/span>, didn\u2019t run the company, and certainly didn\u2019t help anyone launder money. <\/span>He also <\/span>stressed<\/span> the firm\u2019s commitment to privacy <\/span>tech<\/span> and <\/span>said<\/span> they\u2019ve been cooperating with authorities since last year.<\/span><\/p>\n

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If a VC Can <\/span>Be Charged<\/span>, What Next?<\/span><\/h2>\n

This<\/span> could set a new bar for legal risk in the crypto space. <\/span>Charging a venture capitalist for <\/span>putting money into<\/span> a project that later becomes the focus of sanctions or enforcement could <\/span>scare<\/span> other investors <\/span>off<\/span>.<\/span> There\u2019s already hesitance around privacy tech, but this might take it further. Investors may start avoiding anything remotely controversial, even if the tech itself is neutral.<\/span><\/p>\n

DISCOVER: 20+ Next Crypto to Explode in 2025<\/a><\/strong><\/p>\n

Schmidt Stays Silent, Defense Takes the Hit<\/span><\/h2>\n

With Schmidt refusing to testify, the defense team loses a key opportunity to explain Dragonfly\u2019s side of the story. His testimony could have helped Storm show that the developers were working with partners who took compliance seriously. But since the government didn\u2019t grant immunity, Schmidt kept quiet. That decision could impact how the rest of the case unfolds.<\/span><\/p>\n

Big Picture for Crypto and DeFi<\/span><\/h2>\n

Roman Storm and his co-defendant are facing charges related to money laundering and alleged ties to sanctioned groups, including North Korea\u2019s Lazarus Group. Regulators are <\/span>clearly<\/span> widening the net. It\u2019s no longer just about developers. <\/span>Now, <\/span>backers and investors may be <\/span>dragged<\/span> into court <\/span>as well<\/span>.<\/span><\/p>\n

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Is this another phase where all this organization will start going after crypto companies? it absolutely makes no sense for DOJ to act like this. that is bitter nonsense <\/p>\n

I hope you guys win and come out just like how consensys did. <\/p>\n

stay strong haseeb.<\/p>\n

\u2014 danny (@he3is_) July 25, 2025<\/a><\/p>\n<\/blockquote>\n