The prosecution is considering filing criminal charges against Tornado Cash investor Dragonfly.

BlockBeats News, July 26th, according to Coindesk's report, on a public court hearing on Friday, federal prosecutors disclosed to the judge that they are considering filing criminal charges against some employees of crypto venture capital firm Dragonfly Capital due to their involvement in a 2020 investment in the privacy tool Tornado Cash, including managing partner Tom Schmidt.

This statement came during a recess in the hearing of Tornado Cash developer Roman Storm. Storm is currently facing charges of conspiracy to commit money laundering, operating an unlicensed money transmitting business, and violating international sanctions, with a maximum sentence of 45 years in prison if convicted.

In response, Dragonfly's managing partner Qureshi issued a statement on Friday on the X platform: "We strongly believe in the privacy rights of U.S. citizens—the greatest unsolved problem in the crypto space—and therefore stand by this investment. We have never been involved in the operation of Tornado Cash or interacted with malicious users, always requiring portfolio companies to comply with the law, and believe Tornado Cash itself has a legitimate right to exist. Prosecuting a venture capital firm when a portfolio company is suspected of misconduct would set a dangerous precedent." He revealed that the company has been fully cooperating with the investigation since 2023 and warned that if the prosecutors insist on charges, it will create a chilling effect on crypto and privacy tech investments across the U.S.