The U.S. Department of Justice is contemplating criminal charges against Dragonfly Capital Partners, including Tom Schmidt, due to their investment in Tornado Cash developers. This development surfaced during the trial of Roman Storm, a Tornado Cash developer, where prosecutors indicated their investigation into Dragonfly, linking it to alleged violations of U.S. sanctions and money laundering. Dragonfly invested in Pepper Sec Inc., the company behind Tornado Cash, in 2020. Co-founder Haseeb Qureshi stated that the firm has fully cooperated with the DOJ while asserting they believe the charges are groundless and are prepared to defend themselves vigorously. Additionally, there have been subpoenas, device seizures, and a house raid related to this investigation. The outcome could potentially set significant legal precedents regarding the responsibilities of software developers for user actions on their platforms.

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