The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital Partners’ Tom Schmidt and colleagues due to their investment in the developer of Tornado Cash, according to Assistant U.S. Attorney Thane Rehn. This announcement came during the criminal trial of Tornado Cash developer Roman Storm in New York. Dragonfly invested in Pepper Sec Inc., linked to Tornado Cash, in 2020. Schmidt's home was raided, and his devices were seized as part of the investigation. Dragonfly co-founder Haseeb Qureshi expressed confidence in their compliance with the law and stated they would vigorously defend against what he termed absurd charges. Storm is accused of operating an unlicensed money-transmitting business and violating U.S. sanctions, potentially facing 45 years in prison. Tornado Cash, an Ethereum-based mixer created in 2019, has been controversial for its role in money laundering, raising questions about the legal responsibilities of software developers for their creations.

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