Cryptocurrency Advocacy Organizations Rally Against DOJ
A variety of cryptocurrency advocacy organizations have rallied to support a legal case against the US Department of Justice (DOJ), which seeks to hold open-source software developers accountable under money transfer regulations. Notably, the amicus brief was filed by several prominent groups including Paradigm, the DeFi Education Fund, Blockchain Association, and the Crypto Council for Innovation on behalf of Michael Lewellen. Lewellen is known for developing a non-custodial decentralized finance (DeFi) protocol that he intends to launch to the public.
Arguments Against DOJ’s Interpretation
The brief argues that the DOJ is incorrectly applying Section 1960 of Title 18 of the United States Code, a law specifically designed to monitor unlicensed money transmitters, by broadening its scope to encompass creators of decentralized software. The coalition emphasized that the government is targeting developers of peer-to-peer cryptocurrency solutions, even impacting those who merely release open-source software into the community.
“This application by the government is akin to holding a frying pan manufacturer responsible for what someone cooks,”
the brief critiques, pointing out that section 1960’s language does not logically extend to individuals who simply write code. The advocacy groups argue that the DOJ’s interpretation creates ambiguity in the legal landscape, ultimately stifling creativity and discouraging the development of necessary privacy tools within the financial ecosystem.
Risks of Innovation Loss
“If the current legal conditions remain unchanged, we risk losing innovation to other jurisdictions,”
the brief cautions, suggesting that those working on peer-to-peer cryptocurrency technology might relocate abroad or abandon their projects entirely due to fears of prosecution. The legal challenge is particularly relevant as the DOJ actively pursues cases like US v. Storm and US v. Rodriguez, wherein developers of projects like Tornado Cash are facing serious charges under similar statutes.
The brief calls on the court to dismiss the DOJ’s motion to halt the case, asserting that only a judicial declaration can provide clarity on the law and protect the progression of software development in the United States.
Coin Center’s Legal Challenge Dismissed
In a related development, on Thursday, the US Court of Appeals for the Eleventh Circuit ruled against Coin Center‘s lawsuit aimed at the US Treasury Department regarding the 2022 sanctions against Tornado Cash. The court’s dismissal results from a consensus between Coin Center and the Treasury, thus concluding Coin Center’s legal challenge to the designations imposed by the Office of Foreign Assets Control. Coin Center had previously contended that the Treasury overstepped its legal boundaries by sanctioning smart contracts and associated wallet addresses. This case was part of a wider array of legal battles, including one backed by Coinbase on behalf of several Tornado Cash users.
