Federal prosecutors are contemplating charges against Dragonfly Capital Partners' Tom Schmidt and other team members due to their investment in Pepper Sec, a company tied to Tornado Cash developers. During Roman Storm's trial, Assistant U.S. Attorney Thane Rehn revealed that Schmidt's devices were seized and his home was raided as part of the investigation. Dragonfly, which invested in Pepper Sec in 2020, stated they have cooperated with the DOJ's investigation and do not believe the charges would hold merit. Storm faces serious allegations including operating an unlicensed money-transmitting business and violating U.S. sanctions. Tornado Cash, a protocol that obscures cryptocurrency transactions, has been at the center of controversy as some argue developers should not be held accountable for user actions. The case could have significant implications for software developers in the crypto space.

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