The U.S. Department of Justice (DOJ) is contemplating criminal charges against Dragonfly Capital Partners and its partners, including Tom Schmidt, due to their investment in Tornado Cash developers. During the trial of Tornado Cash developer Roman Storm, Assistant U.S. Attorney Thane Rehn revealed this potential action as defense lawyers sought to call Schmidt as a witness. Dragonfly had invested in Pepper Sec Inc., a firm linked to the Tornado Cash developers, in 2020. Dragonfly has maintained compliance with the law and plans to vigorously defend itself against what it deems groundless charges. The case against Storm, who faces potential prison time for allegedly running an unlicensed money-transmitting business and violating U.S. sanctions, raises questions about the legal responsibilities of software developers concerning their products. As the trial unfolds, it could set significant precedents regarding software liability in the cryptocurrency space.

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