The U.S. government is contemplating criminal charges against Dragonfly Capital Partners and its general partner Tom Schmidt for their investment in the developers of Tornado Cash. This information surfaced during the criminal trial of Tornado Cash developer Roman Storm, where Schmidt’s cooperation was revealed, including a subpoena received in 2023. Dragonfly invested in Pepper Sec Inc., a company affiliated with Tornado Cash, in 2020. Haseeb Qureshi, Dragonfly's co-founder, expressed confidence in their compliance with the law and stated they would defend themselves against the potential charges, which they deem absurd. Schmidt had his home raided, and his devices seized during the investigation. The case against Storm could set a precedent for the legal responsibilities of software developers in relation to their creations. Tornado Cash is known for enabling anonymous cryptocurrency transactions, which the U.S. government claims have been exploited for illegal activities.

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