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 by means 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 determination to sue as a stand towards regulatory overreach in an announcement. He added:
“Immediately, 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 software somewhat than a monetary service, shouldn’t be topic to federal money-transmitting legal guidelines.
In contrast to conventional cash transmitters akin 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 decreasing reliance on intermediaries.
Lewellen claimed that the DOJ’s enforcement actions towards builders of comparable non-custodial protocols, akin to Twister Money, reveal a troubling enlargement 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 said:
“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 power them to go away 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 critical to curb illicit exercise and shield customers.
Amanda Tuminelli, chief authorized officer on the DeFi Schooling Fund, praised Lewellen for advocating for software program builders and referred to 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.