14 hours ago
Venture superior steadfast Dragonfly said Friday that the U.S. authorities is weighing imaginable charges implicit its 2020 concern successful PepperSec, the developer of Tornado Cash, marking a uncommon lawsuit wherever national prosecutors whitethorn people a task capitalist for backing a crypto project.
In a elaborate statement, Dragonfly managing spouse Haseeb Qureshi called the imaginable of specified charges “outrageous” and legally unfounded.
He said the steadfast invested successful PepperSec successful August 2020 aft securing an autarkic ineligible sentiment that confirmed Tornado Cash, arsenic designed, complied with national guidance issued by the Financial Crimes Enforcement Network (FinCEN) successful 2019.
Qureshi further stated that Dragonfly believed powerfully successful supporting open-source privacy-preserving technologies and continues to basal by that investment.
The improvement comes days aft the prosecution faced a setback successful developer Roman Storm’s proceedings aft the FBI failed to link funds stolen from a cardinal witnesser to Tornado Cash.
Tornado Cash, launched successful 2019, is simply a decentralized protocol that mixes cryptocurrency transactions to obscure sender and recipient details. The tool, portion valued by privateness advocates, has been accused by U.S. authorities of facilitating wealth laundering for hacking groups, including North Korea’s Lazarus Group.
The Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash successful 2022, but subsequent tribunal challenges forced the authorities to standard backmost definite aspects of its sanctions, a improvement Dragonfly cited arsenic impervious of the protocol’s ineligible standing.
Qureshi said that Dragonfly neither operated Tornado Cash nor had immoderate interaction with illicit users, emphasizing that it offered PepperSec the aforesaid level of guidance it provides to each portfolio companies.
He besides revealed that the steadfast afloat complied with a Department of Justice subpoena issued successful 2023 and was told it is not a nonstop people of the ongoing investigation.
According to Qureshi, the government’s notation of Dragonfly during a caller tribunal proceeding was an effort to weaken Tornado Cash’s defense, perchance by complicating grounds from Dragonfly co-founder Tom Schmidt.
He argued that prosecuting an capitalist implicit the behaviour of a portfolio institution years aft the information would person a chilling effect connected task backing for privateness technologies and blockchain innovation.
Dragonfly’s connection comes amid heightened enforcement efforts against crypto privateness tools, which regulators presumption arsenic a increasing hazard for illicit finance. The steadfast said it remains assured that the DOJ volition not prosecute charges, but it pledged to “vigorously defend” itself if necessary.
The station Venture capitalist Dragonfly faces imaginable charges implicit Tornado Cash involvement appeared archetypal connected CryptoSlate.
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