A coalition of significant crypto organizations in a federal court opposes the DOJ’s attempt to apply money transmission rules to open-source software.
A coalition of advocacy groups advocating cryptocurrency supported a federal lawsuit opposing the US Department of Justice’s (DOJ) attempts to bring charges against open-source software developers under money transmission statutes.
The DeFi Education Fund, Blockchain Association, Crypto Council for Innovation, cryptocurrency investment firm Paradigm, and others submitted an amicus brief on Monday in support of developer Michael Lewellen, who created a non-custodial DeFi protocol and intends to make it publicly available.
The organizations contend that the DOJ is abusing the law by applying Section 1960 of Title 18 of the US Code—a law that was first created to control unlicensed money transmitters—to creators of decentralized software.
The filing stated, “Even if the developers merely publish open-source software, the government is actively prosecuting multiple developers of peer-to-peer cryptocurrency software.”
The DOJ faced criticism for its focus on crypto programmers.
The brief criticizes the DOJ’s definition of “money transmitting,” which includes programmers who create code for tools that others use to conduct separate transactions. It contrasts the DOJ’s strategy with bringing charges against a frying pan maker for the food cooked in it.
According to the brief, “The plain meaning of § 1960 is not that far… one cannot ‘transmit’ or ‘transfer’ funds on someone’s behalf without accepting and relinquishing custody or control.”
According to the brief, the DOJ’s position has created legal ambiguity, deterring developers from creating decentralized financial infrastructure or solutions that improve privacy.
The lobby organization warned that innovation will move abroad if the legal landscape doesn’t change. “[Developers of peer-to-peer cryptocurrency transfer software will either move offshore or stop creating their tools altogether due to the possibility of prosecution.”
The complaint coincides with the DOJ’s ongoing pursuit of cases such as US v. Storm and US v. Rodriguez, in which programmers responsible for Tornado Cash and other tools are charged with crimes under the same statute.
According to the brief, only a declaratory ruling can clarify the law and protect US neutral software development, which urged the court to reject the move to dismiss and permit the action to proceed.
Coin Center’s demand for Tornado Cash declines
Coin Center’s complaint against the US Treasury Department for its 2022 penalties on Tornado Cash was denied by the US Court of Appeals for the Eleventh Circuit on Thursday.
Coin Center and the Treasury resolved the cryptocurrency advocacy group’s legal challenge to the Office of Foreign Assets Control’s classification of the mixing service by reaching a common agreement to dismiss the individual.
At first, Coin Center contended that the Treasury’s approval of smart contracts and related wallet addresses went beyond its legal bounds. The case came after a larger round of legal challenges, which included a well-known litigation supported by Coinbase on behalf of six users of Tornado Cash.
