The U.S. government is weighing potential criminal charges against Dragonfly Capital Partners in relation to their investment in Tornado Cash's developer, Roman Storm. This consideration was revealed during Storm's criminal trial, where Assistant U.S. Attorney Thane Rehn indicated that Dragonfly's Tom Schmidt and others might face charges. Dragonfly invested in Pepper Sec, a company linked to Tornado Cash, in 2020. In response, Haseeb Qureshi, co-founder of Dragonfly, expressed confidence in their compliance with the law and dismissed the possibility of groundless charges. Schmidt has been summoned to testify but invoked the Fifth Amendment during proceedings. Tornado Cash is an Ethereum-based coin mixer, which has faced scrutiny for allegedly being used in money-laundering activities, a risk associated with its functionality. Storm faces severe charges due to the platform being used for illegal transactions, raising critical questions about developer liability in the crypto space.

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