Paradigm Files Amicus in Lewellen v. Bondi

Yesterday, Paradigm filed an amicus brief in Lewellen v. Bondi, a federal case challenging the DOJ’s attack on software developers publishing open-source code.

We joined forces in this case with our allies at the DeFi Education Fund, alongside the Blockchain Association, Crypto Council for Innovation, the Digital Chamber, the Solana Policy Institute, the Bitcoin Policy Institute, and the Uniswap Foundation, to support the plaintiff, Michael Lewellen, a developer who created a non-custodial crypto protocol and wants to make it publicly available. The case challenges the Justice Department’s increasingly aggressive use of a criminal statute aimed at unlicensed money transmitters (18 U.S.C. § 1960), to prosecute mere developers of software who are not money transmitters. We filed the brief because the government’s position is not just wrong on the law; it threatens the future of neutral crypto infrastructure in the United States and will send innovation fleeing overseas.

Our Amicus Brief

As our brief explains, Section 1960 makes it a crime to operate an unlicensed money transmitting business. But for decades, courts and regulators have agreed that “transmitting” money means taking custody of someone’s funds and then sending them to someone else. Read more in our blog post here. Lewellen, like the developers in the Tornado Cash and Samourai Wallet prosecutions, isn’t proposing to do that. He merely wrote open-source software that other people could use to transfer their own funds directly. That’s not money transmission; it’s publishing code.

Why it Matters

The government’s new theory flips all existing caselaw on its head. In United States v. Storm, SDNY prosecutors now argue that just writing open-source code that “causes” a transfer is enough to count as transmitting money, with no custody or control required. That interpretation would make all kinds of neutral tools suspect: routers, USB drives, even iPhones. Would you prosecute Ford when a bank robber drives a Mustang getaway car?

The DOJ’s approach flatly contradicts years of Treasury Department guidance under both Presidents Obama and Trump that said custody and control are the key to determining whether money transmission is implicated. And it’s also laughably unworkable. Just like any other publisher, developers of immutable smart contracts often don’t (and can’t) know who is using their code or for what purpose.

We’re seeing practical fallout already. Developers who followed the rules, consulted lawyers, and relied on government guidance now find themselves at risk of indictment–or are already facing trial, in the case of Roman Storm. Understandably, the reaction of the developer community is to stop innovating and to lose faith that the law in the United States means what it says. Some are leaving the country altogether. Without a change, the next generation of DeFi will be built outside the United States, far away from our influence and values.

This chilling effect doesn’t just hurt crypto innovation; it erodes the rule of law. It goes without saying that criminal statutes need to give fair warning. If publishing lawful, non-custodial software today might unexpectedly land you in prison tomorrow, something has gone deeply wrong.

That’s why we’re asking the court to reject the government’s motion to dismiss. The law should be clarified before more people are prosecuted, not after. Developers shouldn’t have to risk prison just to find out if their work is legal. We believe the Constitution demands better, and that the court should say so now.

The full amicus brief is available here.