Dragonfly Capital could quickly discover itself within the crosshairs of U.S. prosecutors over its 2020 funding in Twister Money developer PepperSec, Inc., the agency behind the now-sanctioned crypto privateness protocol.
Key Takeaways:
- Dragonfly Capital could face authorized scrutiny over its 2020 funding in Twister Money developer PepperSec.
- Managing companion Haseeb Qureshi defended the transfer, citing authorized assurances.
- Twister Money continues to course of excessive volumes.
The enterprise capital agency signaled Friday that it might push again laborious if formal expenses are filed.
In a press release on social media, Dragonfly managing companion Haseeb Qureshi defended the funding, stressing that it was made in good religion after receiving authorized assurances of compliance.
“We made this funding as a result of we imagine within the significance of open-source privacy-preserving know-how,” Qureshi wrote. He added that authorized counsel on the time discovered no regulatory purple flags.
US Crackdown on Twister Money Sparks Crypto Privateness Debate
The controversy stems from the US authorities’s crackdown on Twister Money, a software that allows customers to obscure the origin and vacation spot of crypto transactions.
Although the protocol was pitched as a decentralized privateness enhancer, it turned a favourite amongst hackers and sanctioned entities searching for to cover digital footprints.
In 2023, the Division of Justice charged builders Roman Storm and Roman Semenov with cash laundering and violating U.S. sanctions.
Storm’s trial is at the moment underway in New York and will end in a decades-long jail sentence. On Friday, prosecutors steered Dragonfly itself might be subsequent.
Qureshi dismissed the notion as an intimidation tactic. “We imagine the federal government’s assertion in courtroom right now was primarily to undermine a protection of Twister Money,” he mentioned. “Bringing expenses now can be outrageous.”
Dragonfly invested into PepperSec, Inc., the builders of Twister Money, in August of 2020. We made this funding as a result of we imagine within the significance of open-source privacy-preserving know-how. Previous to our funding, we obtained an outdoor authorized opinion that confirmed that…
— Haseeb ＞|＜ (@hosseeb) July 25, 2025
Twister Money has remained a authorized and moral flashpoint within the debate over privateness and regulation in crypto.
Its sanctioning by the U.S. Treasury’s OFAC in 2022 was a landmark second, with authorities alleging it facilitated billions in illicit transactions, together with funds tied to North Korean hackers.
Regardless of the sanctions, Twister Money has proven shocking resilience. Flipside Crypto reported $1.9 billion in deposits by way of the platform within the first half of 2024, indicating continued demand for anonymity instruments in blockchain transactions.
No Closing Ruling Wanted After Twister Money Faraway from Sanctions Listing
In March, the US Treasury Division argued that no additional courtroom ruling is important within the authorized battle over its sanctioning of crypto mixer Twister Money, citing its latest removing of the platform and related addresses from the sanctions record.
As reported, a developer has ported Twister Money to the MegaETH blockchain’s public testnet, enabling non-public transactions on the high-performance community.
MegaETH, which lately launched, boasts a throughput capability of as much as 20,000 transactions per second.
The developer, recognized pseudonymously as Gunboats, mentioned the thought was sparked by the U.S. Treasury’s latest removing of Twister Money addresses from the OFAC sanctions record, following a courtroom ruling earlier this yr.
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