The U.S. government is contemplating criminal charges against Dragonfly Capital Partners' Tom Schmidt and colleagues due to their past investment in Tornado Cash developers, as revealed in court during Roman Storm's trial. Federal prosecutors have reportedly seized Schmidt's devices and raided his home as part of their ongoing investigation. Dragonfly invested in Pepper Sec Inc., a company linked to Tornado Cash developers, in 2020. Schmidt invoked the Fifth Amendment when called to testify, raising questions about whether he will ultimately be compelled to appear in court. Dragonfly's co-founder, Haseeb Qureshi, expressed confidence in their compliance with the law and indicated their intention to vigorously defend against the potential charges. The Tornado Cash platform, created in 2019, is an Ethereum-based mixer designed to anonymize cryptocurrency transactions. Storm faces significant legal challenges, including charges related to operating an unlicensed money-transmitting business and violating U.S. sanctions, as well as alleged money laundering. The outcome of this case could set a precedent regarding the legal responsibilities of software developers.

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