Crypto Advocates Challenge DOJ's Prosecution of Open-Source Developers

A coalition of crypto advocacy groups has united to support a federal lawsuit that challenges the US Department of Justice’s (DOJ) efforts to prosecute open-source software developers under money transmission laws. The groups, including crypto investment firm Paradigm, the DeFi Education Fund, Blockchain Association, and Crypto Council for Innovation, filed an amicus brief on Monday in support of Michael Lewellen in the case of Lewellen v. Bondi. Lewellen, a developer who built a non-custodial DeFi protocol, is facing legal action from the DOJ for his work.

The amicus brief argues that the DOJ is misinterpreting Section 1960 of title 18 of the US Code, a statute originally designed to regulate unlicensed money transmitters, by extending it to developers of decentralized software. The groups contend that the DOJ’s actions are creating legal uncertainty and discouraging developers from building privacy-enhancing tools or decentralized financial infrastructure. The brief compares the DOJ’s approach to prosecuting a frying pan manufacturer for what someone cooks in it, highlighting the absurdity of the DOJ’s interpretation.

The brief further warns that if the legal environment does not change, innovation in the crypto space will migrate offshore. Developers of peer-to-peer cryptocurrency transfer software may choose to move offshore or stop creating their tools altogether due to the threat of prosecution. This legal uncertainty could stifle innovation and drive developers away from the United States, potentially harming the region’s position as a leader in technology and finance.

The filing comes as the DOJ continues to pursue cases like US v. Storm and US v. Rodriguez, where programmers behind tools such as Tornado Cash are facing criminal charges under the same statute. The amici urge the court to reject the motion to dismiss and allow the case to proceed, arguing that only a declaratory judgment can clarify the law and safeguard neutral software development in the United States. The groups believe that a clear legal framework is essential for fostering innovation and protecting developers from unwarranted prosecution.