- DOJ is evaluating charges against Tom Schmidt.
- Emails show Tornado Cash KYC discussions with Dragonfly.
- Schmidt and Qureshi corresponded with Roman Storm.
The U.S. Department of Justice is continuing its investigation into individuals linked to Tornado Cash, the crypto mixer accused of enabling money laundering. Now, Tom Schmidt, a partner at venture firm Dragonfly, is reportedly under review. Court documents filed in the ongoing case against Tornado Cash developer Roman Storm reveal that Schmidt was part of internal conversations about integrating Know Your Customer (KYC) protocols—a critical component of regulatory compliance.
These exchanges were not casual; they involved detailed discussions with Roman Storm, one of the key developers behind Tornado Cash. Alongside Schmidt, Haseeb Qureshi, another well-known figure at Dragonfly, also participated in the correspondence.
What the Emails Reveal
The court filings detail email threads between Storm, Schmidt, and Qureshi, suggesting that the team was aware of the regulatory risks Tornado Cash faced and was considering solutions. KYC integration was discussed as a way to bring Tornado Cash in line with compliance expectations, possibly to distance it from illicit financial activity.
While these conversations could be seen as a proactive compliance effort, federal prosecutors might interpret them differently—as evidence of knowledge about Tornado Cash’s legal gray area and the need to mitigate risk. The DOJ has not yet officially filed charges against Schmidt, but the fact that he is being considered highlights how wide the Tornado Cash investigation is spreading.
What This Means for the Crypto Industry
If the DOJ proceeds with charges, it could set a precedent for holding investors or advisors accountable for the operations of decentralized protocols, even if they are not directly involved in daily development. For venture capitalists and crypto project backers, this development underscores the importance of due diligence and proactive compliance with U.S. laws.
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