The Ministry of Justice may charge the cryptocurrency venture capital firm supporting Tornado Cash.

The important trial of Roman Storm is still ongoing, and federal prosecutors have acknowledged that they are considering charges against staff at Dragonfly Capital, a venture capital fund that has supported Tornado Cash.

The presiding judge has sealed a statement describing specific staff involved. However, the allegations may not target Dragonfly or the entire company. Joint partner Tom Schmidt has been asked to testify, but he has invoked his right to silence.

Dragonfly caught in the Tornado Cash trial

The long-awaited trial of Roman Storm, the founder of Tornado Cash, is underway, and court reporters are closely monitoring the developments. The prosecution began by attempting to link the platform to specific victims, and recently connected Storm to foreign transactions.

Today, they mentioned the other business relationships of Tornado Cash, specifically the venture capital fund Dragonfly Capital.

Dragonfly Capital, a long-standing cryptocurrency venture capital fund, is an early supporter of Tornado Cash. Therefore, prosecutors deemed it necessary to present a series of emails between Storm and the executives of Dragonfly in court.

Clearly, these emails discussed whether to add KYC guidelines to Tornado Cash or not. Some online commentators speculated that the company advised Tornado Cash to bypass KYC regulations, but this is controversial.

New allegations may arise

Nevertheless, U.S. prosecutors have stated that they are reviewing allegations against some employees of Dragonfly for potential involvement in the illegal activities of Tornado Cash.

These allegations will not apply to the entire company or all employees, but the presiding judge has agreed to seal the exact record of this exchange.

The lawyer for Tornado Cash has asked Tom Schmidt, a general partner at Dragonfly, to testify for the platform. However, Schmidt's lawyer invoked the Fifth Amendment, refusing to do so.

Essentially, he argues that Schmidt would be compelled to testify against himself, which is unconstitutional. It is unclear whether this argument will be accepted, but Schmidt did not testify today.

Currently, it is very difficult to make any predictions about the relevance of Dragonfly to the Tornado Cash case. If prosecutors refuse to criminally charge the famous venture capital firm, this could jeopardize Schmidt's efforts to seek immunity.

Of course, the defense called him as a witness, so he can refuse to testify without the protection of the Fifth Amendment.

The court is currently on a weekend recess, and the closing arguments are scheduled to take place next week.

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