Dragonfly Capital, a cryptocurrency enterprise capital agency (VC), could also be dealing with 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 in opposition to a number of people at Dragonfly, together with Basic Associate Tom Schmidt.
Dragonfly Capital’s Position In Twister Money
Throughout a current court docket session, Assistant US Lawyer (AUSA) Rehn indicated that fees may prolong past Schmidt, resulting in a request to seal the transcript of his feedback.
The court docket proceedings revealed electronic 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 continued 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 present legal guidelines, as outlined by the Monetary Crimes Enforcement Community (FinCEN) in 2019.
Warns Of Harmful Precedent
The US Division of Justice has reportedly acknowledged in open court docket that they’re contemplating fees in opposition to Dragonfly primarily based on its funding within the Twister Money workforce. 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 persistently inspired compliance with authorized requirements amongst its portfolio firms.
Furthermore, Qureshi identified that bringing fees in opposition to 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 know-how sectors.
He emphasised that Dragonfly has absolutely cooperated with the Division of Justice’s investigation, stating that the agency has by no means been a goal of the inquiry and has at all times adhered to authorized tips.
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 info.
He famous that the federal government’s statements in court docket could possibly be geared toward undermining Twister Money’s protection, making it more difficult for Schmidt to testify.
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