Federal prosecutors said in open court on Friday that the U.S. Department of Justice is considering criminal charges against venture-capital firm Dragonfly Capital Partners and several of its executives over their early financial support of Tornado Cash, an Ethereum-based coin mixer accused of facilitating large-scale money laundering. Assistant U.S. Attorney Thane Rehn told Judge Katherine Polk Failla that the department is still weighing whether to indict Dragonfly general partner Tom Schmidt and other partners for their 2020 investment in Pepper Sec Inc., the corporate entity behind Tornado Cash. The disclosure came during the criminal trial of Tornado Cash co-founder Roman Storm in the Southern District of New York. Storm faces up to 45 years in prison on charges of operating an unlicensed money-transmitting business, violating U.S. sanctions and conspiring to launder money, including funds allegedly moved by North Korea’s Lazarus hacking group. Schmidt, subpoenaed as a potential defense witness, invoked his Fifth Amendment right against self-incrimination after having his home searched and electronic devices seized earlier in the investigation. Dragonfly co-founder Haseeb Qureshi said the firm received a DOJ subpoena in 2023 and has "fully cooperated" with investigators, calling the prospect of charges "absurd and groundless" and vowing a vigorous defense. Any move against the high-profile crypto investor would mark an escalation of the government’s pursuit of actors it believes enabled Tornado Cash, a case closely watched for its implications on the liability of software developers and their backers.