The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital's Tom Schmidt and his colleagues for their investment in Tornado Cash's developer, Pepper Sec Inc. This revelation was made during the criminal trial of Tornado Cash developer Roman Storm in New York. Schmidt's home was raided, and his devices were seized as part of the DOJ's investigation. Dragonfly claims to have cooperated fully with the government, emphasizing their compliance with the law. Schmidt pleaded the Fifth Amendment when called to testify, leaving uncertainty over his potential future testimony. Tornado Cash, operational since 2019, serves as an Ethereum-based mixer that obscures cryptocurrency transactions, which the DOJ links to criminal activities. Storm faces severe charges, including operating an unlicensed money-transmitting business and money laundering, asserting that developers should not face liabilities for users' actions on their platforms.

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