The U.S. Department of Justice is contemplating criminal charges against Dragonfly Capital Partners and its partners, including Tom Schmidt, due to their investment in the development team behind Tornado Cash, a platform accused of facilitating money laundering. This development occurred during the criminal trial of Tornado Cash developer Roman Storm, where the DOJ discussed its investigation and connections to Dragonfly’s investments. Despite cooperating fully with the DOJ investigation since receiving a subpoena in 2023, Dragonfly co-founder Haseeb Qureshi expressed confidence in their legal compliance and indicated the intent to vigorously defend against what they view as baseless charges. In the trial, Schmidt invoked the Fifth Amendment when questioned. Tornado Cash, designed to increase transaction privacy, faces scrutiny as the DOJ asserts that it has been used for illicit financial activities. The case could establish precedents regarding the legal accountability of software developers for the operations of their platforms.

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