The U.S. government is contemplating criminal charges against Dragonfly Capital Partners, specifically Tom Schmidt and colleagues, linked to their investment in Tornado Cash developer Pepper Sec. This announcement emerged during the criminal trial of Tornado Cash developer Roman Storm in New York. Dragonfly invested in Pepper Sec in 2020, and Schmidt's home was raided as part of the investigation. Dragonfly's co-founder, Haseeb Qureshi, stated that they have fully cooperated with the DOJ and are confident in their compliance with the law. He argued that the potential charges are groundless and vowed to defend the firm vigorously. The prosecutor's case against Storm involves allegations of operating an unlicensed money-transmitting business and potentially laundering money. Tornado Cash, which obscures cryptocurrency transactions, is at the center of this legal scrutiny, raising questions about developers' liability for users’ actions on their platforms.

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