DOJ leaves door open to charge VC pro in Tornado Cash case

A federal prosecutor let slip that the Ministry of Justice still reflects on Tom Schmidt de Dragonfly, before quickly asking the court to seal the comment. The Tornado show is now entangled venture capital in a way that expected.

According to an article of July 25 by the journalist of affairs Fox Eleanor Terrett, a prosecutor of the Ministry of Justice revealed in public hearing that criminal accusations are still examined against Tom Schmidt, general partner of the Dragonfly Capital Society.

The deputy prosecutor of the United States, Thane Rehn, revealed during the trial of Tornado Cash Roman Storm, where the emails between Schmidt, the co-founder of Dragonfly Haseeb Qureshi and the Storm team were presented as proof. One of these exchanges has shown the founders looking for comments on the implementation of KYC measures, a detail that complicates the story of the government of voluntary money laundering.

Tornado’s trial intensifies, the responsibility of investors occupies the scene

Doj’s interest in Tom Schmidt seems to come from the role of Dragonfly as the main funder of Tornado Cash and internal communications that prosecutors can affirm a deeper involvement than typical investment surveillance.

The emails presented to the court reveal that the co-founder of Schmidt and Dragonfly Haseeb Qureshi signed directly with the founders of Tornado Cash, even discussing the potential implementations of your customer (KYC).

This complicates the government’s assertion that developers knowingly facilitated money laundering, as it suggests efforts to explore compliance. However, prosecutors seem to test a new theory: that financial donors could bear responsibility if the tools of their portfolio companies are later used, even if investors never controlled protocol operations.

Rehn’s request to seal her remark on the potential loads of dragonfly refer to the sensitivity of the doj around her strategy. Superficially, this may indicate in progress surveys or a desire to avoid prematurely shaping the perception of the public before the charges are finalized.

He also underlines the high issues for Schmidt, who, by invoking the fifth amendment, said that he thought that his testimony could expose him to the prosecution. The defense had put pressure for immunity forced his account, seeing him as a key witness to counter the story of the Doj. Without its testimony, the Storm team loses the opportunity to highlight the advisory role of Dragonfly, which could have helped distribute the founders against allegations of criminal intention.

The implications go far beyond this trial. If the DoJ continues Schmidt or other dragonfly figures, it could create a precedent that would cool investments in confidentiality tools or open source projects. Investors can require unprecedented monitoring of technical decisions or completely avoid controversial sectors.

Meanwhile, Roman Storm and the Roman Codefener Semenov face charges, including the conspiracy in order to commit violations of money laundering and sanctions, which bear a maximum combined sentence of 40 years in prison. The Doj alleges that they knowingly allowed criminals, including the Lazarus group of North Korea, despite the insistence of the developers on the fact that the torade in cash was only neutral infrastructure.