The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital Partners, specifically targeting general partner Tom Schmidt and others, regarding their investment in Tornado Cash developers. This revelation emerged during the criminal trial of Tornado Cash developer Roman Storm in New York. Dragonfly invested in Pepper Sec, a company linked to Tornado Cash's developers, in 2020. Assistant U.S. Attorney Thane Rehn indicated that this investigation is ongoing. Dragonfly co-founder Haseeb Qureshi stated that they have complied with legal requirements and expressed confidence in their innocence, arguing that the potential charges are unfounded. As the trial unfolds, Schmidt exercised his Fifth Amendment rights, leaving questions regarding his potential testimony. The case raises significant issues surrounding the legal responsibilities of software developers for the actions of users on their platforms, particularly regarding privacy and regulatory compliance. Tornado Cash, an Ethereum-based coin mixer launched in 2019, has been scrutinized for its alleged use by criminals to facilitate money laundering, a charge Storm faces in his trial, where he could face up to 45 years in prison.

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