The U.S. Department of Justice (DOJ) has officially withdrawn any intention to pursue charges against Dragonfly Ventures for its early investment in the privacy-focused crypto mixer Tornado Cash, according to a public statement by one of the firm’s co-founders.
DOJ No Longer Targets Dragonfly
In a post on X (formerly Twitter) Tuesday, Dragonfly co-founder Haseeb Qureshi confirmed that the DOJ had formally clarified in court that neither Dragonfly nor any of its executives are subjects of any ongoing investigations.
“The DOJ has now backtracked. They have stated on the record in the trial Monday morning that the media reports… were inaccurate,” Qureshi wrote.
This marks a major reversal from a Friday statement, in which the DOJ reportedly suggested it was considering charges related to Dragonfly’s 2020 investment in the Tornado Cash project. That comment, according to Qureshi, violated DOJ protocol.
“They are never allowed to speculate on prosecuting a third party in open court in front of the media,” he added, calling the original comments both unprecedented and inappropriate.
Context: Tornado Cash Case Ongoing
This legal turn comes in the middle of the DOJ’s high-profile case against Roman Storm, one of Tornado Cash’s co-founders. Storm is facing charges of conspiracy and sanctions violations, as the DOJ claims the crypto mixer was used to launder billions of dollars — including funds linked to North Korean hacking group Lazarus.
Tornado Cash, an Ethereum-based protocol, allows users to anonymize crypto transactions — a function that has made it popular for privacy-conscious users but also for illicit actors.
Why It Matters for Venture Capital and Crypto
The DOJ’s initial statement sparked serious concerns across the crypto venture capital landscape, suggesting that investors could be retroactively held accountable for supporting projects that later come under regulatory scrutiny.
However, with the DOJ now publicly stating that Dragonfly is not a target, some of that uncertainty may be alleviated — at least temporarily. This move may reassure other venture firms wary of potential backlash over past investments in decentralized technologies.
The DOJ’s retreat underscores the complex line between investing in innovation and navigating evolving U.S. crypto regulations.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.