The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital Partners concerning their investment in the developers of Tornado Cash. Assistant U.S. Attorney Thane Rehn made this disclosure during the trial of Tornado Cash developer Roman Storm, where Dragonfly's Tom Schmidt was mentioned. Dragonfly had previously invested in Pepper Sec, an entity owned by Tornado Cash developers, which raises legal questions about their compliance. Haseeb Qureshi, co-founder of Dragonfly, stated they have cooperated with the investigation and do not believe the charges would be substantiated. During the trial, Schmidt invoked the Fifth Amendment, and federal prosecutors conducted a raid on his residence and seized devices as part of their investigation into alleged unlicensed money transmission by Storm. The case surrounding Tornado Cash could set a significant legal precedent regarding the responsibilities of software developers in the blockchain ecosystem.

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