• DOJ is weighing criminal charges against Dragonfly Capital’s Tom Schmidt linked to a 2020 Tornado Cash investment.
• Roman Storm’s defense was impacted after Schmidt declined to testify, citing potential self-incrimination.
• Dragonfly Capital confirmed cooperation with investigators and denied control over Tornado Cash operations.

Federal prosecutors are considering criminal charges against a general partner at Dragonfly Capital for a 2020 investment into Tornado Cash, a crypto privacy tool now at the center of a high-profile money laundering trial. The development surfaced during court proceedings in the Southern District of New York, where Tornado Cash developer Roman Storm faces multiple conspiracy charges.

Prosecutors Consider Charges Over Past Investment

During a break in the trial on Friday, prosecutor Nathan Rehn informed Judge Katherine Polk Failla that charges against Tom Schmidt, a general partner at Dragonfly Capital, were under consideration. The discussion followed the introduction of messages between Storm, Schmidt, and Dragonfly managing partner Haseeb Qureshi as part of the prosecution’s evidence.

Rehn clarified in court that the Department of Justice (DOJ) is not targeting the entire firm, but specifically Schmidt and another unnamed individual. The government requested the court to seal the transcript from that portion of the hearing. The judge approved the request.

Defense Witness Declines to Testify

The possibility of charges had a direct impact on Storm’s defense strategy. His legal team had planned to call Schmidt as a witness to provide context for communications presented in court and to speak about Dragonfly’s investment rationale. However, due to the lack of immunity offered by the government, Schmidt declined to testify and invoked the Fifth Amendment.

Storm currently faces up to 45 years in prison if convicted on charges of conspiracy to commit money laundering, operating an unlicensed money transmitting business, and violating international sanctions.

Dragonfly Managing Partner Issues Public Statement

Following the courtroom revelation, Haseeb Qureshi publicly addressed the situation. In a post on X, formerly Twitter, he confirmed that Dragonfly invested in Tornado Cash but denied any operational involvement with the platform. Qureshi said the firm maintained no contact with illicit users and encouraged legal compliance within its portfolio.

He also confirmed that Dragonfly had cooperated with federal investigations since 2023. According to Qureshi, the firm believes the investment aligned with lawful privacy rights in the U.S. and claimed any charges would be “outrageous” and “contrary to the facts.”
The prosecution introduced multiple communications in court to support its case.

These included exchanges about Tornado Cash’s front-end changes and potential profits. The messages also helped establish venue jurisdiction in New York due to Schmidt’s Manhattan location. The DOJ has not announced any formal charges against Dragonfly Capital or its employees at this time. The case against Roman Storm remains ongoing in federal court.