Filed under #TheArtOfTheDeal

BREAKING: Morning hearings in US. v Storm revealed that Dragonfly Capital VC Thomas Schmidt's home was raided and devices seized as part of the Storm investigation, and that both he and Dragonfly's Haseeb Qureshi have been "subjects" of the investigation. That and more:

I am very concerned that the courts, these AUSA's prosecuting crypto crime, and the IRS do not seem to understand the difference between using LIFO to: (1) establish the amount of assets that flowed through a very limited set of KNOWN parties and a very limited set of their KNOWN accounts. (2) trace $148k through TEN unattributed wallets on the blockchain, each of which do somewhere between $4m in volume and $1.5 billion in volume, to establish that the last wallet in the chain received the victims funds and then sent out the victim's funds to Tornado Cash. I've never seen anything like this. I've never worked with a single fed who would back a freeze like this. I wouldn't back a freeze like this. Doing so runs a real risk in freezing an innocent third-party's funds unlawfully. It almost certainly does not impact the actual criminal—the thief, or their money laundering counterparts. Thus, it would not create recourse for the victims of the original crime.

Q&A: Inner City Press asked the IMF today if El Salvador if just moving Bitcoin around in its wallets, and not buying anymore. Spokesperson's answer here...

While the focus now is rightly on Roman Storm and my coverage for @theragetech, just a reminder that I cover elite financial crime and financial autonomy extensively at my newsletter, Dark Markets. This week I published a roundup of the Storm case, link below.

From "hackers sent 100ETH to Tornado" to "9.7ETH have indirectly reached Tornado" very quickly. If it's really what happened, it's borderline "falsified evidence" territory. 😡

Wait. Wait. Wait. Are you seriously telling me that a LIFO heuristic has been used to trace funds on a public blockchain? 😳

During the final 10 minutes of the prosecution’s examining SA George, they plan to discuss how the funds stolen from Ms. Lin, the first witness in the case, were put through TC. Will report on this when the trial day ends at 3:45 PM EST.

A major morning in U.S. vs. Storm with @davidzmorris. In a defeat for the defense, IRS tracing expert Stephan George will be allowed to testify to the flow of Hanfeng "Katie" Lin's stolen funds through Tornado Cash, eliminating the possibility her testimony will be struck.

Here for day 8 of the Tornado Cash trial. Will be in and out today due to some other obligations but will share what I can in this thread 🧵