The U.S. Department of Justice (DOJ) is contemplating charges against Dragonfly Capital Partners related to their investment in the developer of Tornado Cash, a cryptocurrency mixer. During Tornado Cash developer Roman Storm's criminal trial, Assistant U.S. Attorney Thane Rehn indicated that charges could be pursued against Dragonfly's Tom Schmidt and several associates. Dragonfly invested in Pepper Sec Inc., the entity behind Tornado Cash, in 2020. In response to a DOJ subpoena in 2023, Dragonfly asserted its compliance with the law while expressing disbelief over possible charges. Schmidt has claimed his Fifth Amendment rights during the trial, leaving uncertainty regarding his potential testimony. Tornado Cash's service has been under scrutiny, with allegations that it facilitated money laundering and was misused by criminals. Storm is facing significant prison time for operating an unlicensed money-transmitting business. This case raises questions about the legal responsibilities of developers in relation to how their software is used.

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