A fellow at the crypto think tank Coin Center filed a lawsuit against US Attorney General Merrick Garland on Thursday seeking a judicial guarantee that the Department of Justice (DOJ) will not be able to prosecute his upcoming crypto project for violating money transmission laws in the future.
The lawsuit, filed by blockchain entrepreneur Michael Lewellen, alleges that the Department of Justice’s (DOJ) prosecution of software developers who publish non-custodial cryptocurrency software—including the ongoing prosecutions of Tornado Cash developer Roman Storm and Samourai Wallet co-founder Keonne Rodriguez—is unconstitutional and violates the First and Fifth Amendments.
In addition to being unconstitutional, the suit claims, “the DOJ’s prosecution of crypto developers betrays[s] its own representations to the public,” that unless developers have “total independent control over the value” being moved, they are not acting as transmitters of money.
Lewellen’s case comes amid growing concern about government persecution of crypto-protection software developers, both in the United States and abroad. Tornado Cash’s Storm faces up to 45 years in prison if convicted on all counts related to his work with the crypto-mixing service; Rodriguez faces a maximum of 25 years in prison for creating the Samourai Wallet. Both men have pleaded not guilty and will go on trial this year.
In the absence of a clear regulatory and legal framework for cryptocurrencies, preemptive lawsuits like Lewellen’s are becoming increasingly common. Last year, two NFT artists filed suit against the US Securities and Exchange Commission (SEC) to obtain a similar declaratory judgment that protected them from civil penalties by the SEC.
Read more: Does the SEC really have jurisdiction over NFT art? Two artists are suing the SEC for an answer
Through his suit, Lewellen tries to avoid the fate of Rodriguez and Storm. His upcoming project, Pharos, is essentially a crypto-based Kickstarter. Built on Ethereum, his crowdfunding platform will use a type of smart contract he calls “insurance contracts” to ensure donors automatically get their money back if the project isn’t fully funded. The project will also have privacy features that prevent a project’s donors from becoming publicly identifiable.
As the creator and publisher of the Pharos software, Lewellen will only receive a predetermined fee from projects that are successful. According to his suit, “he will never have control over the cryptocurrency that goes through Pharos.”
Garland, who was appointed by President Joe Biden, will soon leave the DOJ. President-elect Donald Trump’s pick to replace Garland as attorney general, former Florida Attorney General Pam Bondi, is currently undergoing nomination hearings. Garland’s successor will automatically be replaced as the named defendant in the case upon his departure from the DOJ.
