The Tornado Cash case is nearing its end, and the Department of Justice has rarely clarified that venture capital firms are not targets of the investigation.

As the criminal case against Tornado Cash co-founder Roman Storm nears its conclusion, the U.S. Department of Justice (DOJ) issued an unusual clarification statement in court.

Federal prosecutor Nathan Rehn pointed out that the allegations against Dragonfly and its executives, as well as the related media reports, are inaccurate and misleading.

According to Haseeb Qureshi, managing partner at Dragonfly, federal prosecutor Nathan Rehn stated in court on July 28 that the cryptocurrency venture capital firm and its executives are not the target of the investigation.

This statement relieved Dragonfly, which had previously been caught up in public opinion, as the venture capital firm faced pressure due to its investment in Tornado Cash in 2020. In fact, Dragonfly conducted compliance assessments before the investment to ensure it was in line with the anti-money laundering regulations of the U.S. FinCEN.

At the same time, Roman Storm, a co-founder of Tornado Cash, is accused of laundering over $1 billion due to the open-source cryptocurrency privacy protocol released in 2019 and allegedly violating U.S. sanctions against the North Korean hacking group Lazarus.

Since the court hearing began at the Manhattan Federal Court on July 14, the case has entered a critical stage, with blockchain analysis experts and former platform users testifying one after another. The prosecution attempts to prove that Storm actively participated in the review of illegal transactions, while the defense invokes the "code neutrality" principle, arguing that developers should not be held accountable for the ways in which the protocol is used.

Currently, the market is generally focused on the fact that the final judgment of this case may set an important precedent for the liability of open source developers. If all charges are established, Storm could face a maximum sentence of 45 years in prison.

Interestingly, the DOJ's rare clarification is unusual; this practice of publicly excluding specific agencies from suspicion in court violates the norm, as the Department of Justice typically remains silent about the targets of investigations. This statement seems aimed at preventing the case from affecting the venture capital industry and refocusing attention on the Storm case.

As the closing arguments draw near, the verdict in this case will not only determine individual fates but may also become a bellwether for the United States' liability determinations regarding open source software. As Qureshi stated: "The outcome will have profound repercussions on the future of privacy rights and open source innovation."

#TornadoCash审判 # RomanStorm case #Dragonfly clarification