The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital Partners and its partners, including Tom Schmidt, related to their investment in Tornado Cash’s developer. This revelation occurred during the ongoing criminal trial of Tornado Cash developer Roman Storm, who faces serious charges for operating an unlicensed money-transmitting business and for allegedly facilitating money laundering via the crypto mixer. Dragonfly had invested in Pepper Sec Inc., the Tornado Cash developers’ company, in 2020. Dragonfly co-founder Haseeb Qureshi stated that they are confident they have complied with U.S. laws and would vigorously defend against any charges they believe to be unfounded. Schmidt’s home was raided, and devices were seized as part of the investigation. Prosecutors mentioned that emails were exchanged between Schmidt and Storm regarding compliance measures for the Tornado Cash platform. The case raises pressing questions about the legal responsibilities of software developers in the crypto space amidst claims of misuse of their technologies by criminal entities.

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