A group of cryptocurrency advocacy organizations is supporting a federal lawsuit challenging the U.S. Department of Justice (DOJ) efforts to prosecute open-source software developers under money transmission laws.
Cryptocurrency investment firms Paradigm, the DeFi Education Fund, the Blockchain Association, and the Crypto Innovation Council submitted an amicus brief in support of Michael Lewellen, in the case of Lewellen v. Bondi. Lewellen is a developer who built a non-custodial DeFi protocol and plans to release it publicly.
These organizations argue that the DOJ is misapplying Section 1960 of Title 18 of the U.S. Code, a regulation originally intended to regulate unlicensed money transmitters, but which is now being extended to developers of decentralized software.
“The government is actively prosecuting multiple peer-to-peer cryptocurrency software developers, even when those developers are merely releasing open-source software,” the document states.
The brief criticizes the DOJ for interpreting “money transmission” to include developers who write code for others to trade independently. It likens the DOJ's approach to prosecuting a frying pan manufacturer because someone used it to cook.
“By its literal meaning, Section 1960 does not extend so far… a person cannot ‘transmit’ or ‘transfer’ money without accepting and relinquishing custody or control,” the brief states.
The brief argues that the DOJ's position creates legal uncertainty, hindering developers from building privacy-enhancing tools or decentralized financial infrastructure.
The lobbying groups warn that if the legal environment does not change, innovation will shift overseas. “Faced with potential prosecution […] peer-to-peer cryptocurrency transfer software developers will choose either to relocate overseas or completely stop creating their tools.”
As this document was submitted, the DOJ continues to pursue cases similar to U.S. v. Storm and U.S. v. Rodriguez, where programmers behind tools like Tornado Cash are facing criminal charges under the same regulations.
The amicus brief urges the court to deny the motion to dismiss and allow the case to proceed, stating that only a declaratory judgment can clarify the law and protect neutral software development in the U.S.
The U.S. Court of Appeals for the Eleventh Circuit dismissed Coin Center's lawsuit against the U.S. Treasury's 2022 sanctions on Tornado Cash.
The dismissal was reached through a joint agreement between Coin Center and the Treasury, effectively ending the legal challenge by cryptocurrency advocacy organizations against the Office of Foreign Assets Control's designation of mixing services.
Coin Center initially argued that the Treasury exceeded its legal authority by sanctioning smart contracts and associated wallet addresses. Their lawsuit followed a wave of broader legal challenges, including a high-profile case supported by Coinbase representing six Tornado Cash users.
Related: Truth Social applies for crypto blue-chip ETF | USDT0 on-chain issuance surpasses 200 million
Original article: “Cryptocurrency Organizations Support Lawsuit Against DOJ's Crackdown on Open Source Code”
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