DOJ Clarifies Smart Contract Developers Not Liable Without Criminal Intent

The U.S. Department of Justice (DOJ) has clarified that smart contract developers will not be held criminally liable unless there is clear evidence of criminal intent behind their work. Acting Assistant Attorney General Matthew Galeotti, head of the DOJ Criminal Division, announced this policy shift during the August 2025 American Innovation Project Summit in Wyoming. The clarification signals a pivot from the DOJ’s previous enforcement strategies and provides much-needed legal certainty for developers working in the decentralized finance (DeFi) space [1].

According to the DOJ, writing code for open-source smart contracts—without the intent to facilitate illegal activity—will not be considered a criminal act under federal law. Galeotti emphasized that innovation in the space is not a crime when it is pursued without ill intent. This distinction is critical for developers who create tools that may later be misused by others, such as for money laundering or sanctions violations. The DOJ now plans to focus enforcement efforts on developers who knowingly design systems to enable criminal activity [1].

This clarification follows the landmark Tornado Cash case, where a co-founder was convicted of conspiracy but not money laundering, underscoring the challenges of applying traditional legal frameworks to decentralized technologies [2]. The DOJ’s updated stance is seen as a response to longstanding concerns from the crypto community that overly broad enforcement could stifle innovation and unfairly penalize developers for unintended misuse of their code. Developers and startups are now expected to feel more confident in pursuing DeFi projects, with potential increases in project funding and participation [2].

The policy also reflects a broader regulatory recalibration in the U.S. government’s approach to crypto, including the dissolution of the DOJ’s specialized crypto enforcement team and the SEC’s dismissal of several high-profile lawsuits. These moves suggest a more measured and flexible regulatory environment for the crypto industry, where innovation is encouraged while still maintaining accountability for those who act with malicious intent [1].

Industry observers believe this new approach could help attract more traditional financial actors to regulated crypto markets, as clearer legal boundaries are established for decentralized technologies. While the DOJ’s policy provides much-needed clarity, it also makes it clear that developers who knowingly create tools to support fraud, money laundering, or sanctions violations remain at risk of prosecution. The focus remains on intent, not merely the outcome of code deployment [2].

Matthew Galeotti, Head of the DOJ Criminal Division, said, “Our view is that merely writing code without ill intent is not a crime. Innovating new ways for the economy to store and transmit value and create wealth without ill intent is not a crime.” [1]

Source:

[1] Techmeme (url: https://www.techmeme.com/250821/p24)

[2] Yahoo (url: https://www.yahoo.com/news/articles/report-hulk-hogan-death-may-183020433.html)