A coalition of crypto advocacy groups threw its weight behind a federal lawsuit challenging US Department of Justice (DOJ) efforts to prosecute open-source software developers under money transmission laws.
Crypto investment firm Paradigm, the DeFi Education Fund, Blockchain Association, Crypto Council for Innovation and others filed an amicus brief on Monday in support of Michael Lewellen, a developer who built a non-custodial DeFi protocol and plans to release it publicly.
The groups argue that the DOJ is misusing Section 1960 of title 18 of the US Code, a statute originally intended to regulate unlicensed money transmitters, by extending it to developers of decentralized software.
“The Government is actively prosecuting multiple developers of peer-to-peer cryptocurrency software [...] even if those developers simply publish open-source software,” the filing said.
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DOJ slammed for targeting crypto coders
The brief criticizes the DOJ's interpretation of “money transmitting” to include developers who write code for tools others use to transact independently. It compares the DOJ’s approach to prosecuting a frying pan manufacturer for what someone cooks in it.
“By its plain meaning, § 1960 does not stretch that far... one cannot ‘transmit’ or ‘transfer’ funds on someone’s behalf without accepting and relinquishing custody or control,” the brief reads.
The brief argues that the DOJ’s stance has sown legal uncertainty, discouraging developers from building privacy-enhancing tools or decentralized financial infrastructure.
The lobby group warned that if the legal environment doesn’t change, innovation will migrate offshore. “Faced with possible prosecution [...] developers of peer-to-peer cryptocurrency transfer software will choose to either move offshore or stop creating their tools altogether.”
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 brief urged the court to reject the motion to dismiss and allow the case to proceed, saying only a declaratory judgment can clarify the law and safeguard US neutral software development.
Related: The open source debate: Is crypto losing its soul?
Coin Center loses Tornado Cash appeal
On Thursday, the US Court of Appeals for the Eleventh Circuit dismissed Coin Center’s lawsuit against the US Treasury Department over its 2022 sanctions on Tornado Cash.
The dismissal came through a joint agreement between Coin Center and the Treasury, effectively ending the crypto advocacy group’s legal challenge to the Office of Foreign Assets Control’s designation of the mixing service.
Coin Center initially argued that the Treasury exceeded its legal authority by sanctioning smart contracts and associated wallet addresses. The lawsuit followed a broader wave of legal challenges, including a high-profile case backed by Coinbase on behalf of six Tornado Cash users.
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