Michael Lewellen, a prominent crypto developer, has filed a legal lawsuit against U.S. Attorney General Merrick Garland. The lawsuit, filed in a Texas federal court on January 16, aims to establish that Lewellen’s upcoming crypto software, Pharos, is legal. Lewellen seeks a court ruling to block any potential criminal prosecution related to publishing the software.

The software in question is a non-custodial crypto tool designed for crowdfunding campaigns. However, Lewellen faces challenges due to the U.S. government’s interpretation of existing laws on money transmission. The Department of Justice (DOJ) has targeted developers of similar crypto tools, arguing that these projects may be engaging in unlicensed “money transmitting” activities.

Legal Challenges Against DOJ’s Money Transmission Laws

Lewellen argues that the DOJ’s interpretation of money transmission laws exceeds constitutional limits. According to Lewellen, the government’s approach violates First and Fifth Amendment rights, which protect free speech and limit government power in criminal matters. He explains that his software does not involve direct control over users’ funds, distinguishing it from other financial operations that require a money transmission license.

The lawsuit is supported by Coin Center, a crypto advocacy group. This legal action reveals growing concerns within the crypto community regarding the U.S. government’s policy on Web3 software development. In particular, the cases of Tornado Cash and Samourai Wallet developers, who faced prosecution for their roles in crypto mixers, are central to the ongoing debate.

Lewellen’s lawyers argue that non-custodial software like Pharos, which does not control users’ funds, should not fall under the same legal framework as traditional money transmitters. The case reveals broader fears in the crypto space about the potential restriction of innovation under existing laws

This lawsuit represents a major challenge to the U.S. government’s approach to regulating cryptocurrency and Web3 development. Lewellen’s actions come during the increased assessment of the crypto industry, especially concerning regulatory clarity. His case aims to establish a legal guideline for the future of decentralized applications and software in the United States.

The outcome of the case could influence future legal interpretations of Web3 technologies, particularly regarding their classification under financial regulations. If successful, Lewellen’s lawsuit could clear the path for greater innovation and clearer regulatory guidelines for cryptocurrency developers in the U.S.