DOJ Clarifies: No Investigation Into Dragonfly Ventures Over Tornado Cash Investment

The U.S. Department of Justice (DOJ) has officially stated that Dragonfly Ventures and its executives are not under investigation for their past investment in Tornado Cash, according to Dragonfly co-founder Haseeb Qureshi.

In a post shared Tuesday on X (formerly Twitter), Qureshi confirmed that DOJ prosecutors clarified their position during a Monday court session, calling previous media reports “inaccurate and misleading.”

“They have stated on the record in the trial Monday morning that the media reports that they were planning to bring charges against Dragonfly were inaccurate,” Qureshi wrote.
“Neither Dragonfly nor any of its principals are targets in their investigation.”

Qureshi also shared court transcripts where DOJ attorneys discredited claims that Dragonfly was facing scrutiny, emphasizing that the company remains outside the scope of the Tornado Cash probe.

Just days earlier, on Friday, DOJ prosecutors hinted at potential charges against Dragonfly during the trial of Tornado Cash developer Roman Storm, citing the firm’s 2020 investment in PepperSec, Inc., the company behind Tornado Cash.

That suggestion drew swift backlash from Qureshi, who called the move “unprecedented” and a violation of DOJ policy. In a follow-up post, he alleged the public implication was a tactic to discourage Dragonfly from testifying in Storm’s defense.

“Speculating about third-party prosecution publicly is prohibited for good reason,” Qureshi wrote.
Dragonfly Defends Tornado Cash Investment

Qureshi defended the firm’s involvement with Tornado Cash, stating the decision was based on support for open-source, privacy-preserving technology — and made after consulting legal experts.

“We made this investment because we believe in the importance of open-source privacy-preserving technology,” Qureshi said.

“We sought outside legal counsel before investing, who confirmed Tornado Cash was compliant.”

The controversy centers on Dragonfly’s 2020 investment in Tornado Cash, well before the platform became the target of U.S. sanctions.

In 2022, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, alleging the service facilitated billions in illicit transactions, including those linked to North Korean hacking group Lazarus.

However, OFAC’s sanctions were partially overturned earlier this year, following a civil suit filed by Tornado Cash users who argued the government had overreached.

Storm’s Trial Intensifies as Legal Costs Rise

Meanwhile, the trial of Tornado Cash developer Roman Storm is entering its third week in New York. Storm faces charges of money laundering and sanctions violations and has pleaded not guilty.

On Saturday, Storm appealed to the crypto community for an additional $1.5 million in legal funding. He has already raised over $3.9 million, but says mounting trial costs are outpacing resources.

The DOJ’s clarification regarding Dragonfly offers a moment of relief for the crypto venture capital world — but the broader case against Tornado Cash and its developers continues to test legal boundaries around privacy, code, and accountability in decentralized networks.

As the trial unfolds, it’s becoming clear that this case could set significant precedents for how the U.S. treats privacy tools — and the investors who support them.