The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital's Tom Schmidt and partners due to their investment in the developer of Tornado Cash, as revealed during Tornado Cash developer Roman Storm's trial in New York. Dragonfly invested in Pepper Sec, linked to the Tornado Cash developers, in 2020. Schmidt's devices were seized, and his house was raided amid the investigation. Haseeb Qureshi, co-founder of Dragonfly, expressed confidence in their compliance with legal standards, claiming that the potential charges are absurd and groundless. During the trial, Schmidt invoked the Fifth Amendment when called to testify. Tornado Cash, established in 2019, functions as an Ethereum-based coin mixer, making transactions less traceable. Storm faces significant prison time for alleged violations surrounding the service, which the government claims was misused by criminals. The case raises critical questions about the legal responsibilities of software developers in the cryptocurrency landscape.

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