Michael Lewellen is a Blockchain Developer who has filed a suit against the US Department of Justice. The lawsuit accuses President Joe Biden’s administration of restricting innovation within the crypto industry by overly interpreting federal money-transfer laws.
Lewellen’s lawsuit centers on his work with Pharos, a non-custodial protocol that facilitates trustless and transparent crowdfunding campaigns. Users can pool their cryptos for charities or projects using Pharos without intermediaries.
Lewellen said in a press release that he was taking legal action to fight regulatory overreach. He continued:
“Today, I’m taking a stand against the Biden administration’s unjust crackdown on crypto development […] This isn’t just about Pharos; it’s about the future of cryptocurrency innovation in America.”
Legal Challenge
Lewellen said that the federal laws governing money transfers should not apply to his protocol of non-custodial custody, which he compares more to an instrument than to a service.
Pharos, unlike traditional money-transfer services such as Western Union and Venmo does not direct or control the transfer of funds. Pharos allows the user to perform transactions independently. This preserves privacy, and reduces reliance on third parties.
Lewellen claimed that the DOJ’s enforcement actions against developers of similar non-custodial protocols, such as Tornado Cash, demonstrate a troubling expansion of federal authority.
The Financial Crimes Enforcement Network’s (FinCEN) long-standing guidelines, which previously stated that money transmitting tools that are not in the possession of the user do not count as such, were departed from by these cases.
Lewellen stated that:
“The DOJ’s broad interpretation of money transmission laws threatens the ability to build freely […] For too long, the Biden administration has used a lack of clarity to scare builders away from new technology or force them to leave the USA.”
The implications of the study
The case highlights growing tensions between US regulators (and the crypto industry) and US companies. Lewellen and others argue that regulatory ambiguity is driving innovation to other countries, while regulators maintain tighter supervision will protect consumers.
Amanda Tuminelli serves as the Chief Legal Officer at DeFi Education Fund. praised Lewellen for advocating software developers and calling the lawsuit “hero stuff.”
Peter Van Valkenburgh said, the CEO of non-profit Coin Center organisation, that they support Lewellen’s rights to publish software.
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