U.S. Department of Justice Steps Back: Dragonfly Will Not Face Charges Over Tornado Cash Support

The U.S. Department of Justice (DOJ) has distanced itself from earlier claims suggesting it planned to prosecute the crypto investment firm Dragonfly for its support of the controversial protocol Tornado Cash. Dragonfly argued that the initial statement served as an intimidation tactic to prevent its involvement in the defense of Roman Storm.

🔹 DOJ Clarifies Its Position: Dragonfly Is Not Under Investigation Thane Rehn, a federal prosecutor and Assistant U.S. Attorney, recently stated that previous media reports were “inaccurate and misleading.” He emphasized that no individuals associated with Dragonfly — including directors, executives, employees, or controlling investors — are targets of any investigation. “The government wants the record to be crystal clear: Dragonfly is not the subject of this investigation,” said Rehn.

🔹 Dragonfly Accuses DOJ of Intimidation Dragonfly issued a sharp response, claiming the DOJ attempted to silence the firm by implying it could face prosecution for merely backing Tornado Cash. The controversial remark came during a public hearing, where a DOJ prosecutor suggested that financial support for the privacy-focused, open-source protocol might be grounds for criminal charges. The timing was notable, as Dragonfly partner Tom Schmidt had recently attended a conference and was expected to testify in support of Storm — one of Tornado Cash’s developers. Hasseeb Qureshi, Managing Partner at Dragonfly, described the DOJ’s behavior as “unprecedented” and “in violation of its own policies.” “The DOJ should never publicly speculate about potential prosecution of third parties during open court proceedings. This move was clearly designed to silence us,” said Qureshi.

🔹 What’s at Stake The case has broader implications for open-source development and privacy rights in the crypto space. Prosecuting investors for backing technology alone could set a dangerous legal precedent. “The outcome of this case could shape the future of privacy and software freedom in the United States,” warned Qureshi. Earlier this year, U.S. authorities removed Tornado Cash from the sanctions list, acknowledging that North Korean hackers had exploited the protocol for laundering illicit funds. Nevertheless, the project's developers — including Roman Storm — still face legal proceedings. A decisive ruling is expected this week, potentially influencing not just the defendants' fate but also the future of decentralized protocols and financial freedom in the U.S.

#TornadoCash , #DOJ , #Cryptolaw , #CryptoCommunity , #Web3

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