The U.S. Department of Justice is contemplating charges against Dragonfly Capital Partners in relation to their investment in Tornado Cash. During the trial of Tornado Cash developer Roman Storm, Assistant U.S. Attorney Thane Rehn disclosed that they are considering actions against Dragonfly's Tom Schmidt and other partners. In 2020, Dragonfly invested in Pepper Sec, an entity associated with Tornado Cash. Although Schmidt took the Fifth Amendment when called to testify, prosecutors have raided his residence and seized his devices as part of their investigation. Dragonfly's co-founder Haseeb Qureshi expressed confidence in their legal compliance and intends to vigorously defend against any allegations, which he views as unfounded. Tornado Cash, which launched in 2019, functions as an Ethereum-based mixing service aimed at obscuring cryptocurrency transaction details, raising questions about the responsibilities of software developers under U.S. law.

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