Crypto developer sues DOJ over Biden-era regulatory crackdown

Blockchain developer Michael Lewellen has filed a lawsuit towards the US Division of Justice (DOJ), accusing the President Joe Biden administration of stifling innovation within the crypto sector via 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 initiatives with out the involvement of intermediaries.

Lewellen described his determination to sue as a stand towards regulatory overreach in a press release. He added:

“In the present day, I’m taking a stand towards the Biden administration’s unjust crackdown on crypto improvement […] 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 instrument slightly than a monetary service, shouldn’t be topic to federal money-transmitting legal guidelines. 

Not like conventional cash transmitters corresponding to Western Union or Venmo, Pharos doesn’t management, direct, or possess the funds being transferred. As a substitute, the software program allows customers to execute transactions independently, preserving privateness and lowering reliance on intermediaries.  

Lewellen claimed that the DOJ’s enforcement actions towards builders of comparable non-custodial protocols, corresponding to Twister Money, show a troubling enlargement of federal authority.

He added that these prosecutions deviate from longstanding steerage issued by the Monetary Crimes Enforcement Community (FinCEN), which had beforehand indicated that non-custodial instruments didn’t qualify as cash transmitters.

Lewellen additionally said:

“The DOJ’s broad interpretation of cash transmission legal guidelines threatens the power to construct freely […] For too lengthy, the Biden administration has used a scarcity of readability to scare builders away from new know-how or drive them to depart the USA.”

Broader implications

The lawsuit highlights the rising friction between US regulators and the crypto business. Builders like Lewellen argue that regulatory ambiguity drives innovation offshore, whereas policymakers keep that tighter oversight is important 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 Middle, mentioned that the group helps Lewellen in defending his proper to publish software program.

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