- Dragonfly’s $900,000 investment and later $4M sale clarified as Tornado Cash trial nears conclusion with defense mounting strong challenges.
- Chainalysis witness plans to plead the Fifth as defense accuses prosecutors of witness intimidation in Tornado Cash trial proceedings.
- Defense highlights Chainalysis role as relayer to counter government claims as jury instructions set to shape Tornado Cash trial outcome.
The Tornado Cash trial involving developer Roman Storm entered a crucial phase this week with the defense presenting its case. Recent proceedings revealed that a stipulation signed by both parties resolved questions about venture capital firm Dragonfly’s involvement.
Acting U.S. Attorney Jay Clayton read the agreement into the record, confirming that Dragonfly invested $900,000 in August 2020 for token options. This deal gave the firm 5% of the TORN token supply issued that December.
Dragonfly later sold part of its holdings for over $4 million in August 2022. Moreover, the government clarified that neither Dragonfly nor its executives are under investigation, countering earlier speculation.
Chainalysis Witness Faces Challenges
Tensions escalated around the role of Chainalysis in the trial. Defense lawyer Brian Klein confirmed that a custodian from Chainalysis would testify, but new complications emerged. A Chainalysis witness now plans to plead the Fifth Amendment after a phone call with prosecutors.
This means the witness may appear in court but refuse to answer questions. Defense lawyers claimed prosecutors from the Southern District of New York threatened potential witnesses, including Dragonfly Managing Partner Haseeb Qureshi, to deter testimony. Klein requested that the court review communications between prosecutors and Chainalysis, noting the witness’ sudden change of position.
Defense Strategy Gains Focus
The defense aims to call at least four witnesses, including two from Chainalysis, to challenge the prosecution’s narrative. The defense highlighted that Chainalysis allegedly operated a Tornado Cash relayer.
Based on the government’s logic, the defense argued, this could imply that Chainalysis also participated in the same activities it accuses Storm of facilitating. This argument could weaken the prosecution’s allegations that Storm and others used Tornado Cash to evade sanctions and launder illicit funds.
As the trial approaches its final days, the charge conference will determine the jury instructions, shaping how they interpret the case. Analysts believe this stage could influence the trial’s outcome. Additionally, the court may soon decide whether Roman Storm will testify, a decision that could shift the narrative.
