Crypto Advocates Challenge DOJ's Open-Source Code Crackdown

Coin WorldWednesday, Jul 9, 2025 7:41 am ET
2min read

A coalition of crypto advocacy groups, including the DeFi Education Fund, the Blockchain Association, Paradigm, and several other firms, has united to challenge the Department of Justice's (DOJ) efforts to crack down on open-source code. The coalition is urging a federal court to reject the DOJ's attempt to impose restrictions on the use and development of open-source code within the crypto industry. This move comes as a response to the DOJ's increasing scrutiny and regulatory actions against crypto developers, which the industry argues stifles innovation and infringes on developers' rights.

The coalition's legal challenge centers around the DOJ's interpretation of existing laws and regulations, which the coalition contends are being misapplied to target crypto developers. The coalition's legal challenge aims to clarify the boundaries of regulatory authority and protect the rights of developers to create and share open-source code. The coalition argues that the DOJ's actions are overreaching and could set a dangerous precedent for future regulatory actions. The open-source nature of many crypto projects is a cornerstone of their development and security, and any restrictions on this code could have far-reaching implications for the industry.

Paradigm, a crypto investment company, joined the alliance and filed an amicus brief on July 7, challenging the DOJ’s attack on software developers publishing open source code. The coalition supports plaintiff Michael Lewellen, a developer who created a non-custodial crypto protocol and wanted to make it publicly available. Lewellen merely published the code, which is not a money transmission, contrary to what the DOJ accused him of. The coalition called the Department of Justice’s prosecution unfair and accused it of misusing section 1960 of the Title 18 of the US Code. In their filing, the coalition reported that the government is actively prosecuting P2P crypto software, even when the developers are publishing open-source software.

Developers who followed the rules, consulted lawyers, and relied on government guidance are also finding themselves at the risk of indictment or are facing trials. Emphasizing the wrongdoing of the DOJ, Paradigm stated, “We filed the brief because the government’s position is not just wrong on the law; it threatens the future of neutral crypto infrastructure in the United States and will send innovation fleeing overseas.” The crypto group coalition urged the government to give more clarity on the DOJ laws before prosecuting. Without clarity, developers will keep facing penalties and imprisonment, halting innovation in the US. The amicus brief submitted by the coalition defines unlicensed illegal money transmitting, which, according to the crypto firms, was not committed by Lewellen.

The crypto group coalition believed that people would lose faith in the US law if it does not provide clarity before executing charges. It will also confuse the developers to understand what falls under legal circumstances and what doesn’t. If this harsh and illogical regime continues, many developers will start to flee overseas to continue their innovative work. The ongoing legal battles highlight the complex regulatory landscape facing the crypto industry. The DOJ's actions have sparked concerns about government overreach and the potential chilling effect on innovation. The crypto community's response, including the coalition's legal challenge, underscores the industry's determination to protect its rights and continue to innovate in the face of regulatory scrutiny. The outcome of these legal battles will have significant implications for the future of the crypto industry, shaping the regulatory environment and the rights of developers to create and share open-source code.

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