Roman Storm's important trial is still ongoing, and the federal prosecutor acknowledged that they are considering prosecution of employees from the venture capital firm DragonFly Capital, which supported Tornado Cash.
The presiding judge has sealed the statement describing specific employees in question. However, the potential prosecution is not against DragonFly or the entire company. General partner Tom Schmidt was requested to testify but exercised his Fifth Amendment right.
DragonFly Involved in Tornado Cash Trial
The long-awaited trial for Roman Storm, the founder of Tornado Cash, is in progress, with court reporters carefully following the proceedings. The prosecution is attempting to link the platform to specific victims and has recently connected Storm to overseas transactions.
Today, they mentioned other business connections of Tornado Cash, particularly its venture capital sponsor, DragonFly Capital.
AUSA Rehn: We've spoken with Tom Schmidt's lawyer John Bostick
โ Inner City Press (@innercitypress) July 25, 2025
Judge: Are you looking at possibly prosecuting everyone at DragonFly?
AUSA Rehn: Not everyone, but Schmidt and
Rehm: My chief says we'll ask to seal this
Judge Failla: Yes, I seal it
DragonFly Capital is a long-standing cryptocurrency-related venture capital fund and an early supporter of Tornado Cash. Therefore, the prosecution deemed it appropriate to present a series of emails between Storm and DragonFly management in court.
These emails appear to discuss whether to add KYC guidelines to Tornado Cash. Some online commentators speculated that the company explicitly advised ignoring KYC protocols for Tornado Cash, but this is controversial.
Potential New Charges
In any case, the US prosecutor claimed they are considering prosecution of several DragonFly employees due to potential involvement in Tornado Cash's illegal activities.
This prosecution will not apply to the entire company or all employees, but the presiding judge agreed to seal the exact record of this exchange.
Tornado Cash's lawyers requested that Tom Schmidt, DragonFly's general partner, testify on behalf of the platform. However, Schmidt's lawyer cited the Fifth Amendment and refused.
Essentially, he argued that Schmidt would be compelled to testify against himself, which would be unconstitutional. It is unclear whether this argument will be maintained, but Schmidt did not testify today.
At present, it is difficult to predict whether DragonFly is entangled in the Tornado Cash case. If the prosecution chooses not to criminally charge a famous venture capital firm, this could pose a risk to Schmidt's immunity request.
Of course, since the defense called him as a witness, he could have refused to testify without the protection of the Fifth Amendment.
The trial is on recess over the weekend, with final arguments expected next week.
