Roman Storm’s landmark trial is still ongoing, and federal prosecutors admitted that they’re considering charges against employees at Dragonfly Capital, a VC that backed Tornado Cash.

The presiding Judge sealed a statement describing the specific employees in question. However, the possible charges wouldn’t be directed at Dragonfly or the entire firm. General Partner Tom Schmidt was asked to testify, but pled the Fifth.

Dragonfly Entangled in Tornado Cash Trial

The long-awaited trial for Roman Storm, founder of Tornado Cash, is underway, and court reporters are carefully following the proceedings. The prosecution opened by trying to connect the platform to specific victims, and recently tied Storm to offshore dealings.

Today, they referred to Tornado Cash’s other business connections, specifically its VC backer Dragonfly Capital.

Dragonfly Capital, a longstanding crypto-related VC fund, was an early supporter of Tornado Cash. Therefore, prosecutors found it relevant to show the court a series of emails between Storm and Dragonfly executives.

Apparently, these emails discussed whether or not to add KYC guidelines to Tornado Cash. Some online commentators speculated that the firm explicitly advised Tornado Cash to disregard KYC protocols, but this is controversial.

Possible New Charges

In any event, US prosecutors claimed that they’re considering charges against several Dragonfly employees due to their possible involvement in Tornado Cash’s alleged illegal activity.

These charges wouldn’t apply to the entire corporate entity or every employee, but the presiding Judge agreed to seal the exact transcript of this exchange.

Tornado Cash’s lawyers requested that Tom Schmidt, a general partner at Dragonfly, testify on the platform’s behalf. However, Schmidt’s attorney invoked the Fifth Amendment, refusing to do so.

Essentially, he argued that Schmidt would be forced to bear witness against himself, which is unconstitutional. It’s unclear if this argument will hold up, but Schmidt didn’t testify today.

For now, then, it’s difficult to make any predictions about Dragonfly’s entanglement with the Tornado Cash case. If prosecutors decline to criminally charge the prominent VC firm, this might jeopardize Schmidt’s bid for immunity.

Of course, the defense called him as a witness, so he could potentially refuse to testify without the Fifth Amendment’s protection.

The trial is now in recess for the weekend, and closing arguments are expected next week.