Dragonfly Capital, a cryptocurrency enterprise capital agency (VC), could also be going through fees from the US Division of Justice (DOJ) associated to its early funding in Twister Money, co-founded by Roman Storm.
Fox journalist Eleanor Terret reported that federal authorities are considering fees towards a number of people at Dragonfly, together with Basic Companion Tom Schmidt.
Dragonfly Capital’s Function In Twister Money
Throughout a latest courtroom session, Assistant US Lawyer (AUSA) Rehn indicated that fees might lengthen past Schmidt, resulting in a request to seal the transcript of his feedback.
The courtroom proceedings revealed e-mail exchanges between Twister Money co-founder Roman Storm and Dragonfly companions, Haseeb Qureshi and Tom Schmidt, discussing the potential implementation of Know-Your-Buyer (KYC) protocols for the platform.
This element provides one other layer to the scrutiny surrounding Dragonfly’s involvement with Twister Money which has been scrutinized over the previous years for allegedly being utilized by unhealthy actors to launder “billions of {dollars}” in illicit funds, together with stolen crypto.
In response to the continuing investigation, Haseeb Qureshi took to social media platform X (previously Twitter), to defend Dragonfly’s place. He clarified that the agency invested in PepperSec, the builders of Twister Money, in August 2020, citing a perception within the significance of open-source privateness applied sciences.
Qureshi emphasised that previous to the funding, Dragonfly secured an exterior authorized opinion confirming that Twister Money was compliant with current legal guidelines, as outlined by the Monetary Crimes Enforcement Community (FinCEN) in 2019.
Warns Of Harmful Precedent
The US Division of Justice has reportedly said in open courtroom that they’re contemplating fees towards Dragonfly based mostly on its funding within the Twister Money group. Qureshi expressed concern over this potential plan of action, arguing that it might set a harmful precedent.
He underscored that Dragonfly didn’t have operational management over Twister Money, maintained no contact with any malicious customers, and constantly inspired compliance with authorized requirements amongst its portfolio corporations.
Furthermore, Qureshi identified that bringing fees towards a enterprise capital agency for a portfolio firm’s alleged wrongdoing could be unprecedented and will have a chilling impact on investments within the cryptocurrency and privacy-preserving expertise sectors.
He emphasised that Dragonfly has totally cooperated with the Division of Justice’s investigation, stating that the agency has by no means been a goal of the inquiry and has all the time adhered to authorized pointers.
In gentle of the potential fees, Qureshi expressed confidence in Dragonfly’s authorized standing, asserting that any makes an attempt to prosecute the agency could be unfounded and opposite to the details.
He famous that the federal government’s statements in courtroom may very well be aimed toward undermining Twister Money’s protection, making it tougher for Schmidt to testify.
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