The U.S. government is considering charges against Dragonfly Capital Partners’ Tom Schmidt and others for their investment in Tornado Cash's developer, Pepper Sec Inc. This revelation emerged during the trial of Roman Storm, a Tornado Cash developer, where prosecutors mentioned they had seized Schmidt's devices and raided his residence in the course of their investigation. Schmidt's team had previously invested in Pepper Sec in 2020, and during the trial, Schmidt invoked the Fifth Amendment when prompted to testify. Dragonfly's co-founder, Haseeb Qureshi, expressed confidence in their compliance with the law and stated their intention to vigorously defend themselves against what he described as groundless charges. The case is pivotal, as it questions whether software developers can be held liable for the uses of their creations. Tornado Cash, an Ethereum-based coin mixer, is at the center of this legal scrutiny due to allegations of its use by criminals for laundering money. Storm could face up to 45 years in prison if convicted of the charges against him.

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