DoJ reverses course, clears Dragonfly of Tornado Cash-related charges.
Roman Storm’s trial to test crypto privacy and investor liability.
Trump-era policy shift narrows DoJ crypto enforcement focus.
The U.S. Department of Justice (DoJ) has made a surprising U-turn in its legal stance against Dragonfly, a prominent crypto venture capital firm, amid the ongoing Tornado Cash controversy.
Initially, DoJ prosecutors hinted at potential charges against Dragonfly for its investment in Tornado Cash, a decentralized cryptocurrency mixer accused of facilitating billions in illicit transactions, including by North Korean hackers.
However, following public outcry and a statement from Dragonfly’s managing partner, Hasseeb Qureshi, the DoJ clarified on July 29, 2025, that Dragonfly and its affiliates are not targets of investigation. Federal Prosecutor Thane Rehn labeled earlier media reports as “inaccurate and misleading,” aiming to set the record straight.
Since our statement on Friday, we've received overwhelming support from across the crypto, tech, and venture communities. We want to sincerely thank you all for standing behind us.
The DOJ has now backtracked. They have stated on the record in the trial Monday morning that the… https://t.co/3zQRAwmal6 pic.twitter.com/9vSrJseTMx
— Haseeb ＞|＜ (@hosseeb) July 29, 2025
This reversal comes as Roman Storm, a Tornado Cash co-founder, faces trial in the U.S. starting July 14, 2025, with Dragonfly’s potential testimony playing a pivotal role. The firm had invested in PepperSec, Inc., Tornado Cash’s developers, in 2020, believing in the legitimacy of open-source privacy technology. Qureshi criticized the DoJ’s initial threat as a “clear violation of policy,” alleging it was a tactic to deter Dragonfly from supporting Storm’s defense. The case has sparked broader debates about the liability of financial backers in crypto projects and the future of privacy-focused technologies.
The DoJ’s shift aligns with a broader policy change under the Trump administration, which disbanded the National Cryptocurrency Enforcement Team in April 2025, redirecting efforts toward drug cartels and terrorist groups, as reported by Reuters. This move reflects a softening of the Biden-era’s aggressive crypto enforcement stance, further influenced by Trump’s January 2025 executive order supporting blockchain innovation.
Meanwhile, Tornado Cash remains a focal point, with its developers still under scrutiny despite the platform’s removal from the U.S. sanctions list earlier this year. As the trial looms, the outcome could redefine the legal boundaries for open-source software and privacy rights in the crypto ecosystem.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
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