NEW YORK — Prosecutors instructed a federal choose in open court docket on Friday that they have been contemplating criminally charging sure staff of crypto enterprise capital agency Dragonfly Capital, together with common accomplice Tom Schmidt, for his or her 2020 funding into privateness software Twister Money.
The dialogue between prosecutor Nathan Rehn and District Decide Katherine Polk Failla of the Southern District of New York (SDNY) got here amid a break within the ongoing trial of Twister Money developer Roman Storm, who has been charged with conspiracy to commit cash laundering, conspiracy to function an unlicensed cash transmitting enterprise and conspiracy to violate worldwide sanctions for his work with the privateness software — expenses for which, if discovered responsible, he faces as much as 45 years in jail.
Throughout their case, the prosecution launched a slew of messages between Storm and two Dragonfly Capital companions, Schmidt and managing accomplice Haseeb Qureshi. Within the context of the federal government’s case, the messages appeared to serve a number of functions: to determine correct venue in New York (as a result of Schmidt relies in Manhattan), to indicate that Storm and his colleagues profited from Twister Money and to indicate that they made frequent adjustments to the entrance finish, or person interface, of the product.
Nonetheless, when Storm’s protection group raised the opportunity of asking Schmidt to testify — seemingly to supply context for his and Storm’s messages and to clarify the agency’s rationale for investing in Twister Money — prosecutors declined to grant Schmidt (in addition to probably one other of the protection’s would-be witnesses) immunity from his testimony getting used in opposition to him in a future prosecution, prompting Schmidt to plead the fifth and decline to testify in Storm’s protection.
“Are you presumably prosecuting everybody at Dragonfly?” Failla requested Rehn on Friday.
“Not everybody, however Schmidt” and one other particular person, Rehn stated, in line with Interior Metropolis Press.
The federal government then requested the choose to seal that portion of the transcript of the open-court dialogue, which she agreed to do.
Qureshi took to X on Friday to defend his agency’s funding in Twister Money, writing:
“We consider deeply in People’ proper to privateness, and the dearth of it stays one in all crypto’s largest unsolved issues. We subsequently stand by our funding. We didn’t function or train any management over Twister Money, we had no contact with any malicious customers, we at all times inspired our portfolio corporations to observe the regulation, and we preserve that Twister Money itself has a lawful proper to exist,” Qureshi wrote. “Charging a enterprise agency for a portfolio firm’s alleged misconduct can be unprecedented, particularly underneath these circumstances.”
Qureshi added that Dragonfly has “totally cooperated” with the federal government’s investigation into Twister Money, which he stated started in 2023.
“In any case of this time — years later — bringing expenses in opposition to Dragonfly can be outrageous, opposite to the information, and would induce a chilling impact onto all funding into crypto and privacy-preserving applied sciences in America,” Qureshi stated. “We don’t consider the DOJ would truly carry such absurd and groundless expenses. But when they do, we intend to vigorously defend ourselves.”
