Daring capital company Dragonfly said on Friday that the US government weigh potential costs on its 2020 investments in Peppersec, the developer of Tornado Cash, which marks a rare case where federal prosecutors can focus a venture investor on supporting a crypto project.
In a detailed one rackDragonfly Managing Partner Haseb Qureshi called the prospect of such charges “scandalous” and legally unfounded.
He said that the company invested in Peppersec in August 2020 after obtaining an independent legal advice that confirmed Tornado Cash, as designed, met the federal guidance of the Financial Crimes Enforcement Network (FINCEN) in 2019.
Qureshi further stated that Dragonfly strongly believed in supporting open-source privacy eligibility technologies and stays with that investment.
The development comes days after the persecution was confronted with a setback in the process of developer Roman Storm after the FBI could not connect with the connecting of funds stolen by an important witness with Tornado -Content money.
Tornado Cash, launched in 2019, is a decentralized protocol that combines cryptocurrency transactions to cover sender and reception data. The tool, although appreciated by proponents of privacy, has been accused by American authorities of facilitating money wax for hacking groups, including the Lazarus group in Noord -Korea.
The Office of Foreign Assets Control (OFAC) of the Treasury Department punished Tornado in 2022, but the following challenges of the court forced the government to scale back certain aspects of its sanctions, a development tribunal that was cited as proof of the legal status of the protocol.
Qureshi said that Dragonfly did neither Tornado -money operated nor contact with illegal users, and emphasized that the Pepperse offered at the same level of guidance that it offers all portfolio companies.
He also revealed that the company has fully complied with a subpoena from the Ministry of Justice in 2023 and was told that it is not a direct target of the current investigation.
According to Qureshi, the mention of the Dragonfly government during a recent legal proceedings was an attempt to weaken the defense of Tornado Cash, possibly by complicating the testimony of Dragonfly co-founder Tom Schmidt.
He argued that the prosecution of an investor years after the fact would carry out an investment of a portfolio company would have a horrifying effect on the financing of venture for privacy technologies and blockchain innovation.
The explanation of Dragonfly is amidst increased enforcement efforts against crypto privacy tools, which regulates supervisors as a growing risk of illegal financing. The company said it remains convinced that the Doj will not follow charges, but it promised to “defend strongly” if necessary.
