The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital's Tom Schmidt and his associates due to their investment in Tornado Cash, a controversial Ethereum-based coin mixing service. This revelation came during the trial of Tornado Cash developer Roman Storm, who faces serious charges, including operating an unlicensed money-transmitting business and violating U.S. sanctions. Dragonfly’s co-founder, Haseeb Qureshi, defended their actions, asserting they have fully cooperated with the DOJ's investigation and believe any charges are absurd. Schmidt has invoked the Fifth Amendment during the trial, leaving his potential testimony uncertain. Tornado Cash, launched in 2019, allows users to anonymize cryptocurrency transactions, a function that has led to legal scrutiny due to allegations that it facilitated money laundering. The government's case against Storm raises significant questions about the legal responsibilities of software developers for user actions on their platforms.

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