The U.S. Department of Justice is contemplating charges against Dragonfly Capital Partners and some of its partners, including Tom Schmidt, linked to their investment in the developer of Tornado Cash. This revelation came during the trial of Tornado Cash's developer, Roman Storm, where Assistant U.S. Attorney Thane Rehn stated the potential charges arise from Dragonfly's investment in Pepper Sec, a firm connected to Tornado Cash's developers. Schmidt's home has been searched, and his devices seized as part of the investigation. Despite receiving a subpoena and cooperating with the ongoing investigation, Dragonfly's co-founder, Haseeb Qureshi, expressed confidence that the DOJ's claims were absurd and groundless. The trial also raises substantial questions regarding the legal responsibilities of software developers for user activities on their platforms. Storm faces significant charges including operating an unlicensed money transmission business, with potential penalties reaching up to 45 years in prison.

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