Blockchain developer Michael Lewellen has filed a lawsuit in opposition to the US Division of Justice (DOJ), accusing the President Joe Biden administration of stifling innovation within the crypto sector by way of overly broad interpretations of federal money-transmission legal guidelines.
Lewellen’s lawsuit facilities on his work with Pharos, a non-custodial protocol that facilitates trustless and clear crowdfunding campaigns. Pharos allows customers to pool crypto for charitable causes or different tasks with out the involvement of intermediaries.
Lewellen described his choice to sue as a stand in opposition to regulatory overreach in an announcement. He added:
“At this time, I’m taking a stand in opposition to the Biden administration’s unjust crackdown on crypto growth […] This isn’t nearly Pharos; it’s about the way forward for cryptocurrency innovation in America.”
Authorized problem
Lewellen argued that his non-custodial protocol, which he likens to a software slightly than a monetary service, shouldn’t be topic to federal money-transmitting legal guidelines.
In contrast to conventional cash transmitters corresponding to Western Union or Venmo, Pharos doesn’t management, direct, or possess the funds being transferred. As an alternative, the software program allows customers to execute transactions independently, preserving privateness and lowering reliance on intermediaries.
Lewellen claimed that the DOJ’s enforcement actions in opposition to builders of comparable non-custodial protocols, corresponding to Twister Money, reveal a troubling growth of federal authority.
He added that these prosecutions deviate from longstanding steering issued by the Monetary Crimes Enforcement Community (FinCEN), which had beforehand indicated that non-custodial instruments didn’t qualify as cash transmitters.
Lewellen additionally acknowledged:
“The DOJ’s broad interpretation of cash transmission legal guidelines threatens the flexibility to construct freely […] For too lengthy, the Biden administration has used a scarcity of readability to scare builders away from new expertise or pressure them to go away the USA.”
Broader implications
The lawsuit highlights the rising friction between US regulators and the crypto trade. Builders like Lewellen argue that regulatory ambiguity drives innovation offshore, whereas policymakers keep that tighter oversight is critical to curb illicit exercise and defend shoppers.
Amanda Tuminelli, chief authorized officer on the DeFi Schooling Fund, praised Lewellen for advocating for software program builders and known as the lawsuit “hero stuff.”
In the meantime, Peter Van Valkenburgh, CEO of the non-profit Coin Heart, stated that the group helps Lewellen in defending his proper to publish software program.
