The U.S. government is contemplating criminal charges against Dragonfly Capital Partners' Tom Schmidt and some of his colleagues as part of the investigation into Tornado Cash developer Roman Storm. During Storm’s trial, Assistant U.S. Attorney Thane Rehn indicated that Dragonfly's involvement, especially their investment in Tornado Cash's developer entity, Pepper Sec, has caught the attention of federal prosecutors. Dragonfly has cooperated with investigations, asserting compliance with the law, while arguing against the potential charges as absurd. Schmidt, who had his home raided and devices seized, invoked the Fifth Amendment when called to testify. Tornado Cash, created in 2019, is an Ethereum-based mixer that obscures cryptocurrency transactions, raising legal questions regarding developer accountability for potential misuse of their technology. Storm faces serious charges, including operating an unlicensed money-transmitting business, amidst a split opinion within the crypto community on coder responsibility for user actions.

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