Blockchain developer Michael Lewellen has filed a lawsuit against the U.S. Department of Justice, accusing the agency of criminalizing crypto development through an overly broad interpretation of federal money-transmission laws.

Filed Thursday, the lawsuit seeks to prevent prosecution of his decentralized crowdfunding platform, Pharos, which he argues operates outside the scope of these regulations.

Pharos, built on Ethereum, uses “assurance contracts,” which employ smart contracts to hold funds and automatically refund donors if funding goals are unmet.

The lawsuit describes the platform as non-custodial, meaning Lewellen neither holds nor controls user funds.

Lewellen contends that the DOJ’s interpretation of 18 U.S.C. §1960 (Prohibition of illegal money transmitting businesses) improperly classifies non-custodial software developers as unlicensed money transmitters.

The DOJ’s stance “betray[s] its own representations to the public by criminally prosecuting people who publish non-custodial cryptocurrency software,” reads the lawsuit.

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Author: Vismaya V