In the new revelations in the most controversial Tornado Case, the DOJ may pursue charges against multiple individuals at a crypto Venture capital (VC) firm, Dragonfly, including General Partner Tom Schmidt.
Prosecutors sought to seal the transcript after AUSA Rehn’s disclosure in court during the trial of Tornado Cash’s founder, Roman Storm.
Emails presented in the court revealed private discussions between Storm, the cofounders, and Dragonfly’s Managing Partner and General Partner about adding KYC to Tornado Cash.
Schmidt invoked the Fifth, but the defense pushed for immunity to secure his testimony.
Tornado Cash Case: A Legal Battle That Defines Crypto’s Future
Tornado Cash, a cryptocurrency privacy tool, was banned by US authorities in 2022 for allegedly helping criminals launder over $7 billion, including funds linked to North Korean hacking groups.
Its developers, Roman Storm, Roman Semenov, and Alexey Pertsev, were charged with money laundering and sanctions violations. Pertsev was jailed in the Netherlands, while Storm faces trial in the US.
However, a group of privacy supporters argues that Tornado Cash was just a neutral tool, like a VPN for crypto, and punishing its creators sets a dangerous precedent. Regulators say its lack of user checks made it ideal for crime.
“Digital assets present enormous opportunities for innovation and value creation for the American people,” Secretary of the Treasury Scott Bessent stated in a press release. “Securing the digital asset industry from abuse by North Korea and other illicit actors is essential to establishing U.S. leadership and ensuring that the American people can benefit from financial innovation and inclusion.”
Regulators around the world continue targeting cryptocurrency mixing services, with US authorities maintaining an aggressive stance under the current US President Donald Trump’s crypto-friendly administration. The Justice Department remains active in prosecuting mixer-related cases.
New York prosecutors are currently also charging Samourai Wallet’s founders for allegedly facilitating $100 million in darkweb money laundering. Additionally, the DOJ recently indicted four North Korean operatives accused of stealing $900,000 in crypto through Tornado Cash while posing as IT workers.
Legal experts believe that despite Trump’s pro-crypto stance, “The administration isn’t a monolith,” observed former federal prosecutor Renato Mariotti.
“It’s certainly possible to be pro-crypto and nonetheless to believe that if someone is conspiring to engage in criminal activity that they should be held responsible,” Mariotti said. “At the end of the day, that distinguishes Tornado Cash from a variety of other players in the space who are acting legally.”
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