The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital Partners and its general partner, Tom Schmidt, in relation to the firm’s investment in the developers of Tornado Cash. Assistant U.S. Attorney Thane Rehn disclosed this during the criminal trial of Tornado Cash developer Roman Storm. Dragonfly invested in Pepper Sec, an entity linked to Tornado Cash developers, in 2020. Schmidt had his home raided and devices seized as part of the investigation. Haseeb Qureshi, co-founder of Dragonfly, stated that the DOJ’s potential charges are baseless, affirming their compliance with the law. The trial revolves around whether developers can be held liable for users’ illicit activities on their platforms, with Storm facing severe legal repercussions for allegedly running an unlicensed money transmission business and violating U.S. sanctions. This case could set a significant precedent regarding the accountability of software developers in the decentralized finance space.

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