The U.S. government is contemplating criminal charges against Dragonfly Capital and its partners over their investment in the company behind Tornado Cash, as revealed during Tornado Cash developer Roman Storm's trial. Tom Schmidt of Dragonfly, along with other executives, had invested in Pepper Sec, an entity owned by Tornado Cash developers. Assistant U.S. Attorney Thane Rehn stated the investigation led to the seizure of Schmidt's devices and a raid on his home. Dragonfly's co-founder, Haseeb Qureshi, expressed confidence in their compliance with the law, asserting that the potential charges are baseless. The case raises important legal questions regarding the liability of software developers for user actions, particularly as Tornado Cash—an Ethereum-based coin mixer—has been used illegally by criminals to launder gains. Storm faces up to 45 years in prison for operating an unlicensed money-transmitting business, and the case is significant for the crypto community's stance on developer responsibility in relation to user privacy and autonomy.

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