Dragonfly responds to the U.S. Department of Justice's allegations of investing in Tornado Cash and will defend its rights if sued

PANews reported on July 26 that the U.S. Department of Justice is considering filing a lawsuit against Dragonfly for its investment in the Tornado Cash team in 2020. Haseeb Qureshi, managing partner of Dragonfly Capital, tweeted that Dragonfly invested in PepperSec, Inc., the developer of Tornado Cash, in August 2020. It made this investment because it firmly believed in the importance of open source privacy protection technology. Before the investment, an external legal opinion was obtained to confirm that Tornado Cash was built in compliance with legal regulations and in accordance with the guidelines issued by FinCEN in 2019. Dragonfly does not operate or control Tornado Cash, nor has it contacted any malicious users. It always encourages portfolio companies to comply with the law and insists that Tornado Cash itself has a legal right to survive. It would be unprecedented to accuse a venture capital firm of alleged misconduct by a portfolio company, especially in the current situation.

In 2023, Dragonfly received a subpoena from the U.S. Department of Justice and fully cooperated with the government's investigation into Tornado Cash. The Department of Justice has made it clear that Dragonfly itself is not the subject of its investigation. As with all investments, Dragonfly provides the same advice and support to PepperSec as it does to all portfolio companies. Dragonfly believes that the government's statements in court are mainly intended to undermine Tornado Cash's defense-making it more difficult for the defense to subpoena Tom to testify in court. Dragonfly does not believe that the Department of Justice will really make such a ridiculous and unfounded accusation. But if they do, Dragonfly intends to defend itself with all its strength.

Previous news, the U.S. Department of Justice may bring Tornado Cash-related charges against Dragonfly employees.