The high-stakes legal battle surrounding Tornado Cash developer Roman Storm is reaching its pivotal phase, with the defense presenting a series of challenging arguments that could significantly sway the trial’s outcome. Recent developments have shed light on a venture capital firm’s involvement and raised contentious questions about a key witness.
Dragonfly’s Investment Under the Microscope
A crucial point clarified this week involves Dragonfly, a prominent venture capital firm. Through a stipulation agreed upon by both the prosecution and defense, it was confirmed that Dragonfly invested $900,000 in August 2020 for token options in Tornado Cash. This agreement granted the firm a 5% share of the TORN token supply issued later that December.
Further details revealed that Dragonfly subsequently divested a portion of its holdings, realizing over $4 million from the sale in August 2022. Importantly, the U.S. government has publicly stated that neither Dragonfly nor its executives are currently under investigation, effectively dispelling earlier market speculation regarding their potential legal exposure. This clarification aims to remove any ambiguity surrounding the firm’s historical engagement with the privacy protocol.
Chainalysis Witness’s Fifth Amendment Stance
The trial’s intensity escalated with revelations concerning a Chainalysis witness. Defense attorney Brian Klein disclosed that a custodian from the blockchain analytics firm, initially expected to testify, now intends to invoke their Fifth Amendment rights, refusing to answer questions.
This dramatic shift follows a phone call between the witness and prosecutors, prompting the defense to accuse the Southern District of New York prosecutors of witness intimidation. Klein has formally requested the court to review communications between the prosecution and Chainalysis, highlighting the abrupt change in the witness’s position as a matter of concern for due process.
Defense Pivots with Relayer Argument
The defense strategy is sharply focused on discrediting the prosecution’s narrative, planning to call at least four witnesses, including two from Chainalysis. A core argument pivots on the allegation that Chainalysis itself operated a Tornado Cash relayer.
The defense contends that if the government’s logic holds true—that operating such a service constitutes facilitating illicit activities—then Chainalysis, by the same measure, could be implicated in similar conduct. This argument seeks to undermine the prosecution’s central claim that Storm and his co-developers intentionally enabled sanctioned entities and money laundering through Tornado Cash. By highlighting Chainalysis’s alleged operational role, the defense aims to demonstrate the pervasive nature of relayers within the protocol’s functionality and challenge the notion of selective culpability.
As the trial hurtles toward its conclusion, the upcoming charge conference will be critical in defining the jury instructions, which will guide how jurors interpret the complex legal and technical aspects of the case. Furthermore, the decision on whether Roman Storm will take the stand is imminent, a move that could profoundly reshape the trial’s narrative and final outcome for the embattled developer and the broader crypto privacy landscape.
