Dragonfly co-founder Haseeb Qureshi reported that the U.S. Department of Justice is not investigating the company or its executives, countering rumors of potential charges.
Clarifications from the DOJ
In a post on X, Haseeb Qureshi stated that DOJ prosecutors confirmed during a Monday court hearing that suggestions regarding Dragonfly being a target were inaccurate. "The DOJ has now backtracked," he wrote, adding that neither Dragonfly nor its principals are targets in their investigation.
Qureshi also shared trial transcripts showing prosecutors pushing back against earlier media speculation, describing it as "inaccurate and misleading."
Context of the Allegations
Last Friday, prosecutors hinted at the possibility of pursuing charges against Dragonfly due to its investment in Tornado Cash developer PepperSec Inc. This prompted a sharp response from Qureshi, who labeled the suggestion as "unprecedented" and accused the DOJ of attempting to prevent Dragonfly from testifying for the defense. He defended the investment, stating that Dragonfly backed Tornado Cash for its open-source, privacy-preserving design and that they obtained legal advice that confirmed compliance before committing funds.
Tornado Cash Situation and Consequences
Tornado Cash, a crypto-mixing tool, was sanctioned by the U.S. Treasury in 2022 over allegations that it facilitated large-scale money laundering and funded cybercrime. Those sanctions were later overturned in a civil suit brought by users of the service. Meanwhile, the trial for Tornado Cash developer Roman Storm began in New York last month. Storm and fellow developer Roman Semenov were indicted in 2023 on charges related to money laundering and sanctions violations. Storm has so far raised nearly $4 million for his legal defense and indicates he needs another $1.5 million as the trial enters its third week.
The DOJ has not issued a public statement confirming its current position on Dragonfly, however, rumors regarding the investigation have been refuted. The scenario surrounding Tornado Cash continues to spark debates between developers and regulators.
