The U.S. government is contemplating criminal charges against Dragonfly Capital Partners and its executives, specifically Tom Schmidt, for their investment in a developer associated with Tornado Cash. This announcement came during the trial of Tornado Cash developer Roman Storm, where Schmidt's involvement was discussed. In 2020, Dragonfly invested in Pepper Sec Inc., the company behind Tornado Cash, which has faced scrutiny for allegedly being used by criminals for money laundering. Dragonfly has stated that they fully cooperated with the investigation and believe the charges are unfounded. The trial could significantly impact the legal responsibilities of software developers for the functionality of their products. Prosecutors previously seized Schmidt's devices and raided his residence as part of the investigation. Storm faces serious charges that could result in a lengthy prison sentence, prompting discussions on the legal implications for developers in the crypto space.

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