Blockchain Developer Michael Lewellen Takes Legal Action Against US Department of Justice
Michael Lewellen, a blockchain developer, has recently filed a lawsuit against the US Department of Justice (DOJ), alleging that the Biden administration is hindering innovation in the cryptocurrency industry by applying overly broad interpretations of federal money-transmission laws.
The lawsuit revolves around Lewellen’s work with Pharos, a non-custodial protocol designed to facilitate transparent and trustless crowdfunding campaigns. Pharos allows users to pool cryptocurrency for charitable purposes or other projects without the need for intermediaries.
In a statement, Lewellen expressed his motivation for taking legal action, stating:
“Today, I’m pushing back against the unjust crackdown on crypto development by the Biden administration. This is not just about Pharos; it’s about the future of cryptocurrency innovation in the United States.”
Challenging Regulatory Overreach
Lewellen contends that Pharos, being a non-custodial protocol that acts as a tool rather than a financial service, should not be subject to federal money-transmitting laws.
Unlike traditional money transmitters like Western Union or Venmo, Pharos does not hold or control the funds being transferred. Instead, it empowers users to conduct transactions independently, maintaining privacy and decreasing reliance on third parties.
Lewellen argues that the DOJ’s enforcement actions against developers of similar non-custodial protocols, such as Tornado Cash, represent an alarming expansion of federal authority.
He also points out that these prosecutions diverge from previous guidance provided by the Financial Crimes Enforcement Network (FinCEN), which previously stated that non-custodial tools do not fall under the category of money transmitters.
Lewellen emphasized:
“The DOJ’s broad interpretation of money transmission laws jeopardizes the freedom to innovate. For too long, the Biden administration has used ambiguity to deter developers from exploring new technologies or compel them to relocate outside the US.”
Implications for the Crypto Industry
This legal action sheds light on the escalating tension between US regulators and the cryptocurrency sector. Developers like Lewellen argue that unclear regulations drive innovation overseas, while policymakers maintain that increased oversight is essential to combat illicit activities and safeguard consumers.
Amanda Tuminelli, chief legal officer at the DeFi Education Fund, commended Lewellen for championing software developers and described the lawsuit as a courageous endeavor.
In support of Lewellen, Peter Van Valkenburgh, CEO of the non-profit Coin Center, affirmed the organization’s backing for Lewellen’s right to release software.
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