New York – Prosecutors told a federal judge in an open court on Friday that they were considering criminally accusing certain employees of the cryptographic risk capital firm, Dragonfly Capital, including the general partner Tom Schmidt, for his investment of 2020 in the Cash Tornado Privacy Tool.
The Discussion Between Prosecutor Nathan Rehn and District Judge Katherine Polk Failla of The Southern District of New York (Sdny) Came Amid A Break in The Ongoing Trial Of Tornado Cash Developer Roman Storm, Who has Been Chargered With Conspiracy to Commit Money Landering, Conspiracy to Operate Unlicensed Money Transmitting Business and Conspiracy to Violate International Sanctions for His Work the Privacy Tool – Charge for Which, If Found Guilty, has faced up to 45 years in prison.
During its case, the Prosecutor’s Office introduced a series of messages between Storm and two capital partners of Dragonfly, Schmidt and the managing partner Haseb Qureshi. In the context of the government’s case, the messages seemed to meet several purposes: establishing an adequate place in New York (because Schmidt is based in Manhattan), to show that Storm and his colleagues benefited from Tornado’s cash and to show that they made frequent changes in the front interface or the product user interface.
However, When Storm’s Defense Team Raised the Possibility of Asking Schmidt To Testify – Likely to Provide Context for His and Storm’s Messages and to Explain The Firm’s Ratione for Investing in Tornado Cash – Prosecutors Declined To Grant Schmidt (As Well As potentially. Defense’s Wouled-Be Witnesses) Immunity from His Testimony Being used agaless him in a Future Prosecution, Prompting Schmidt to plead the fifth and decline to testify in storm’s defense.
“Are you possibly seeing everyone in Dragonfly?” Failla asked Rehn on Friday.
“Not everyone, but Schmidt” and another individual, said Rehn, according to City City Press.
Then, the government asked the judge to seal that part of the transcription of the discussion of the open court, what she agreed to do.
Qureshi led to X on Friday to defend your company’s investment in Cash Tornado, writing:
“We deeply believe in the right of Americans to privacy, and the lack of it remains one of Crypto’s unsolved problems. Therefore, we maintain our investment.” Collecting a risk company for the supposed misconduct of a portfolio company would be unprecedented, especially in these circumstances. “
Qureshi added that Dragonfly has “cooperated” with government investigation into tornado cash, which he began in 2023.
“After all this time, years later, presenting positions against the dragonfly would be scandalous, contrary to the facts, and would induce a chilling effect on all the investment in cryptographic technologies and preservation of privacy in the United States,” he said. “We do not believe that the Department of Justice really brings such absurd and unfounded charges. But if they do, we intend to defend ourselves vigorously.”
