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The landscape of digital privacy, open-source software development, and federal financial regulation reached a critical juncture as software developer Michael Lewellen officially filed his opening brief in the United States Court of Appeals for the Fifth Circuit. Backed by the digital currency policy and advocacy organization Coin Center, Lewellen’s legal challenge seeks a definitive, pre-enforcement judicial ruling regarding whether the publication and maintenance of non-custodial software tools can be criminally prosecuted under federal unlicensed money transmission statutes.

The core of the dispute centers on a fundamental constitutional question: Does the First Amendment protect the publication of source code, and can software developers be held criminally liable under laws designed for traditional financial institutions simply for creating privacy-enhancing or decentralized financial tools? The lawsuit aims to dismantle what advocates describe as a pervasive chilling effect that currently paralyzes innovation within the cryptographic and open-source software sectors across the United States.

Background Context: The Convergence of Software and Money Transmission Laws

To understand the weight of Lewellen’s Fifth Circuit brief, one must examine the evolving enforcement trends of the U.S. Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN). Historically, federal statute 18 U.S.C. § 1960 was enacted to target unlicensed money transmission businesses—typically underground remittance networks, hawala systems, or illicit commercial entities operating outside the bounds of anti-money laundering (AML) and know-your-customer (KYC) regulations.

However, in recent years, federal prosecutors have increasingly applied these statutes to non-custodial software developers. Non-custodial software refers to applications, protocols, or codebases where the creator does not hold, control, or have access to users’ funds. Unlike centralized cryptocurrency exchanges, which act as custodians of customer assets, decentralized tools merely provide infrastructure, user interfaces, or smart contracts that individuals interact with directly.

The legal pressure on developers escalated sharply following high-profile enforcement actions by the Southern District of New York (SDNY). The federal prosecutions of privacy-focused projects such as Tornado Cash and Samourai Wallet sent shockwaves through the technology sector. In those cases, prosecutors argued that writing and deploying privacy-preserving software could constitute operating an unlicensed money transmission business if the tools were utilized by third parties to obscure financial transactions.

For the broader developer community, these actions created an untenable state of legal ambiguity. Creators of open-source software—ranging from crowdfunding applications to decentralized finance (DeFi) primitives—were left wondering if the simple act of publishing code on platforms like GitHub could land them in federal prison.

Chronology of Lewellen’s Legal Battle

The legal journey leading to the current Fifth Circuit filing reflects a calculated effort by privacy advocates to secure judicial certainty rather than waiting for the next sweeping federal indictment.

• Pre-Litigation Climate (2022–2024): Following heightened regulatory scrutiny and the crackdown on mixing services, software developers across the United States experienced acute anxiety regarding public code repositories. Many developers voluntarily removed projects, ceased maintaining open-source tools, or moved operations offshore to avoid potential prosecution.
• Filing and Initial Challenges (2025): Michael Lewellen, recognizing that informal assurances from regulators were legally worthless, took proactive steps to challenge the government’s expansive interpretation of 18 U.S.C. § 1960. Lewellen developed non-custodial crowdfunding software and faced a well-founded fear of criminal prosecution should he publish, maintain, host, or market his tools.
• The District Court Stage: Lewellen sought a declaratory judgment to establish that his code does not violate federal money transmission laws. The initial proceedings set the stage for a comprehensive constitutional appeal.
• The Fifth Circuit Appeal (July 2026): Lewellen filed his formal opening brief in the Fifth Circuit, aggressively challenging the federal government’s legal stance and demanding a clear, binding limitation on prosecutorial overreach. Coin Center stepped in to support the litigation, designating the case as a paramount priority for the preservation of constitutional rights.

Detailed Analysis of the Brief: Speech, Due Process, and Noblesse Oblige

Lewellen’s opening brief presents a multifaceted legal argument rooted in constitutional law, statutory interpretation, and the rule of law. The brief attacks the government’s position on two primary fronts: First Amendment protections for speech and Fifth Amendment due process rights.

1. Software Code as Protected Speech

A central pillar of Lewellen’s argument is that software code is speech. When a developer writes, compiles, and publishes source code, they are communicating ideas, instructions, and mathematical concepts. As SEC Commissioner Hester Peirce has noted, publishing code is a form of expression protected by the First Amendment. Criminalizing the publication of general-purpose software because it might be used by bad actors creates an impermissible prior restraint on free expression.

2. The Fallacy of Prosecutorial Discretion

The brief strongly rebukes the federal government’s reliance on informal assurances and internal policy memos. While the current administration has signaled a desire to pivot away from aggressive targeting of software developers—notably referencing administrative guidance such as the Blanche memo—Coin Center and Lewellen argue that these measures are legally insufficient.

A directional memo offers no binding interpretation of statutory limits. It leaves citizens "at the mercy of noblesse oblige"—relying entirely on the shifting whims of executive discretion rather than concrete statutory protections. As the brief succinctly argues: "A society founded on the rule of law does not want individuals to ‘bet the farm’ by breaking the law first and vindicating their rights second."

Furthermore, the DOJ has consistently refused to formally concede that non-custodial software development falls completely outside the scope of criminal money transmission. This calculated ambiguity leaves open-source developers vulnerable to sudden, arbitrary prosecutions whenever political priorities or administration directives change.

Statements and Reactions from Stakeholders

The legal battle has mobilized significant support from digital rights advocates, legal scholars, and financial regulators who champion technological innovation.

Peter Van Valkenburgh, Research Director at Coin Center, emphasized the existential nature of the threat: "Coin Center is supporting his fight because the chilling effect of these prosecutions is now the number one U.S. policy threat curbing innovation in crypto and endangering Americans’ constitutional rights to speech and privacy." Van Valkenburgh noted that Lewellen’s bravery in seeking a pre-enforcement ruling protects not just his own liberty, but the broader foundation of open-source technology in the United States.

Industry analysts have similarly pointed out that if developers can be successfully prosecuted for writing neutral software, the precedent will not stop at cryptocurrency. Any developer who creates encryption tools, peer-to-peer messaging apps, or cloud-storage protocols could theoretically be held liable for the illicit actions of end-users.

Broader Implications for Technology and the Rule of Law

The outcome of Lewellen’s case in the Fifth Circuit will likely reverberate across the American technological landscape for decades. Several key implications emerge from this legal showdown:

• The Future of Open Source in the U.S.: A favorable ruling protecting non-custodial software development would provide the legal certainty necessary for developers to innovate without the constant threat of federal indictment. Conversely, an adverse ruling could drive technical talent and capital entirely out of the United States jurisdictions.
• Separation of Powers: By demanding a judicial interpretation of 18 U.S.C. § 1960, the lawsuit tests the judiciary’s willingness to check administrative overreach. For years, executive agencies have stretched vague, decades-old statutes to cover modern technological innovations—a practice critics argue bypasses the legislative role of Congress.
• User Privacy vs. Financial Surveillance: The prosecution of non-custodial tools directly impacts the privacy rights of ordinary citizens. Financial privacy tools allow individuals to transact without exposing their sensitive data to unnecessary third-party harvesting or state surveillance. Curtailing the creation of these tools narrows the scope of digital privacy available in the modern economy.

Conclusion

As the legal proceedings continue in the Fifth Circuit, Michael Lewellen’s challenge stands as a crucial defense of constitutional liberties in the digital age. Echoing the words of John Adams, the brief reminds the court that the United States must remain a nation of laws, not of men. For open-source developers, privacy advocates, and technologists alike, the path forward requires enforceable legal boundaries—not temporary promises from powerful officials—to ensure that innovation and free speech can endure.

In a legal move that could redefine the boundaries of software development and financial regulation in the United States, software developer Michael Lewellen has filed his opening brief in the U.S. Court of Appeals for the Fifth Circuit. The filing seeks a pre-enforcement judgment regarding the application of federal money transmission laws to non-custodial software. Lewellen argues that the current prosecutorial environment, spearheaded by the Department of Justice (DOJ), creates a credible threat of felony charges for developers who write and publish open-source code. This case, supported by the non-profit advocacy group Coin Center, centers on whether 18 U.S.C. § 1960—the federal statute governing unlicensed money transmitting businesses—can be constitutionally applied to individuals who merely provide the tools for financial transactions without ever taking control of user funds.

The core of Lewellen’s argument rests on the distinction between custodial and non-custodial services. While traditional money transmitters like banks or Western Union take physical or digital possession of a customer’s money to facilitate a transfer, non-custodial software allows users to interact directly with decentralized networks. Lewellen asserts that by publishing crowdfunding software that does not grant him control over the assets, he is engaging in protected speech rather than financial conduct. The brief contends that the lack of legal clarity has created a "chilling effect" so severe that it threatens to stifle American innovation and drive the development of privacy-preserving technologies offshore.

The Legal Foundation: 18 U.S.C. § 1960 and the Definition of Money Transmission

At the heart of the dispute is 18 U.S.C. § 1960, a statute that makes it a federal felony to conduct, control, manage, supervise, direct, or own all or part of an unlicensed money transmitting business. Historically, this law was designed to prevent money laundering and ensure that financial intermediaries complied with the Bank Secrecy Act (BSA). However, the definition of a "money transmitter" has become a battleground in the digital age.

The Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department, issued guidance in 2013 and 2019 suggesting that an individual must have "total independent control" over the value being moved to be considered a money transmitter. For years, the cryptocurrency industry operated under the assumption that developers of non-custodial wallets or smart contracts were exempt from these regulations. This changed significantly with recent high-profile prosecutions in the Southern District of New York (SDNY).

The cases against the founders of Tornado Cash and Samourai Wallet have sent shockwaves through the developer community. In these instances, the DOJ argued that providing the infrastructure and maintaining the code for privacy-enhancing tools constitutes money transmission, even if the developers do not hold user private keys or manage the funds. Lewellen’s brief argues that these prosecutions represent a radical departure from established administrative guidance and the statutory language of Section 1960.

Chronology of the Regulatory Shift and Lewellen’s Challenge

The trajectory of the current legal conflict can be traced back over a decade, marked by a tightening of the regulatory knot around decentralized finance (DeFi).

• 2013: FinCEN issues its first major guidance on virtual currencies, stating that software developers are generally not money transmitters unless they also engage in the business of accepting and transmitting value.
• 2019: FinCEN reaffirms that "an anonymizing software provider is not a money transmitter" if they only provide the tool and do not engage in the transmission of value.
• August 2022: The U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctions the Tornado Cash smart contract addresses, marking the first time a piece of code, rather than a person or entity, is placed on the Specially Designated Nationals (SDN) list.
• August 2023: The DOJ indicts the founders of Tornado Cash, Roman Storm and Roman Semenov, charging them with conspiracy to commit money laundering and operating an unlicensed money transmitting business.
• April 2024: The founders of Samourai Wallet are arrested and charged with similar offenses, with the DOJ specifically targeting the "mixing" functionality of their non-custodial software.
• 2025-2026: In response to these actions, Michael Lewellen initiates his pre-enforcement challenge. Following lower court proceedings, the case moves to the Fifth Circuit in July 2026, where Lewellen files the current opening brief.

Lewellen’s timeline highlights a growing gap between the written guidance of regulatory bureaus and the actual enforcement actions of the DOJ. This discrepancy is what Lewellen calls a "bet the farm" scenario, where developers must choose between abandoning their work or risking decades in federal prison.

The Constitutional Stakes: First and Fifth Amendment Protections

Lewellen’s brief relies heavily on two pillars of the U.S. Constitution: the First Amendment right to free speech and the Fifth Amendment right to due process.

The argument that "code is speech" has significant legal precedent, most notably in the 1990s "Crypto Wars." In Bernstein v. Department of Justice, the Ninth Circuit ruled that software source code is a form of expression protected by the First Amendment. Lewellen contends that by writing and publishing his crowdfunding software, he is expressing ideas and providing instructions in a specialized language. If the government can criminalize the mere act of publishing that code because it might be used for financial transactions, it constitutes a prior restraint on speech.

Furthermore, the brief cites SEC Commissioner Hester Peirce, who has frequently argued that the act of publishing code should be shielded from aggressive regulatory overreach. Peirce’s stance reflects a broader concern that the government is attempting to regulate the "printing press" rather than the "content" of the financial activity.

Regarding the Fifth Amendment, Lewellen argues that the current application of Section 1960 is unconstitutionally vague. Due process requires that a law give a person of ordinary intelligence fair notice of what is prohibited. Lewellen asserts that because the DOJ has refused to clearly state that non-custodial software development is legal—and has indeed prosecuted developers in similar positions—the law fails to provide the necessary clarity. This vagueness allows for "arbitrary and discriminatory enforcement," a hallmark of due process violations.

Analysis of the "Blanche Memo" and Administrative Discretion

A significant portion of the brief addresses the so-called "Blanche Memo," an internal administration document that reportedly offered guidance on prioritizing prosecutions. While the memo suggested a more lenient approach toward developers who do not exercise control over funds, Lewellen’s legal team argues that it is woefully inadequate for providing legal certainty.

The brief notes that administrative memos are not binding law. They can be rescinded at any time by a change in leadership or a shift in political winds. Lewellen argues that law-abiding citizens should not have to rely on "prosecutorial discretion" or the "noblesse oblige" of powerful government officials to ensure their liberty. Without a court ruling that clarifies the limits of Section 1960, developers remain at the mercy of whichever interpretation the DOJ chooses to favor at a given moment.

This reliance on discretion rather than the rule of law is, according to Lewellen, an affront to the principles laid out by the Founding Fathers. The brief quotes John Adams, emphasizing that the United States is meant to be a "nation of laws, not of men." By seeking a pre-enforcement judgment, Lewellen is asking the court to reaffirm that the law itself, not the temporary policy of an administration, must dictate what is and is not a crime.

Supporting Data: The Economic and Privacy Impact

The chilling effect described in the brief is not merely theoretical; it has measurable implications for the U.S. technology sector. Data from industry reports suggests a significant migration of blockchain developers and capital away from the United States and toward jurisdictions with more predictable regulatory frameworks, such as Switzerland, Singapore, and parts of the European Union under the MiCA (Markets in Crypto-Assets) regulation.

According to a 2025 developer survey by Electric Capital, the U.S. share of the global blockchain developer workforce has seen a steady decline since the 2022 Tornado Cash sanctions. Developers cite the fear of legal liability as the primary reason for relocating or pivoting away from privacy-focused projects. This "brain drain" threatens American leadership in the next generation of internet infrastructure.

Moreover, the privacy implications are profound. Non-custodial software is often the only way for users to maintain financial privacy in an increasingly digitized and surveilled world. If developers are deterred from building these tools, users are forced into custodial systems where their data is centralized, harvested, and vulnerable to breaches. Lewellen’s brief argues that the government’s attempt to classify all privacy-enhancing software as "money transmission" is effectively an attempt to outlaw financial privacy itself.

Broader Implications and Potential Outcomes

The Fifth Circuit’s decision in Lewellen v. Department of Justice will likely have far-reaching consequences for the entire tech industry, not just the cryptocurrency sector. If the court rules in favor of Lewellen, it would establish a vital precedent protecting the act of publishing open-source code from being categorized as a regulated financial activity. This would provide a "safe harbor" for innovation, ensuring that tool-builders are not held liable for the actions of those who use their tools.

Conversely, a ruling in favor of the government could embolden the DOJ to expand its definition of money transmission even further. It could potentially reach into other areas of software, such as encrypted messaging apps that integrate payment features or decentralized social media platforms.

The case also touches on the "Major Questions Doctrine," a legal principle that suggests administrative agencies cannot make decisions of vast economic and political significance without clear authorization from Congress. Lewellen argues that by effectively rewriting Section 1960 to include software developers, the executive branch is usurping the legislative power of Congress.

Conclusion: The Path Forward for the Rule of Law

As the Fifth Circuit prepares to hear the arguments, the eyes of the global technology community are on Michael Lewellen. His request for a pre-enforcement judgment is a demand for the fundamental right to know the law before being accused of breaking it. The brief concludes with a call for the judiciary to fulfill its role as a check on executive overreach, ensuring that the development of new technology does not come at the cost of constitutional rights.

The outcome of this case will determine whether the United States remains a hospitable environment for the creators of decentralized technology or whether the "chilling effect" of aggressive prosecution will freeze out the next era of digital innovation. For Lewellen and the advocates at Coin Center, the fight is about more than just crypto; it is about the enduring principle that in a free society, the act of writing and sharing information should never be a crime.

In a legal move that could redefine the boundaries of software development and financial regulation in the United States, Michael Lewellen has filed an opening brief in the U.S. Court of Appeals for the Fifth Circuit. The filing marks a critical juncture in the ongoing battle between decentralized technology innovators and federal law enforcement agencies. Lewellen’s suit seeks a pre-enforcement judgment to determine whether the act of publishing, maintaining, and marketing non-custodial software constitutes a violation of federal money transmission laws. Supported by the cryptocurrency advocacy group Coin Center, the case argues that the current prosecutorial climate has created a "chilling effect" that threatens the constitutional rights of developers and the future of open-source innovation.

The Core of the Legal Dispute: 18 U.S.C. § 1960

At the heart of Lewellen’s legal challenge is 18 U.S.C. § 1960, a federal statute that criminalizes the operation of an "unlicensed money transmitting business." Historically, this law was utilized to target shadow banking operations, underground hawala networks, and traditional money launderers who moved physical or electronic currency without proper state or federal registration. However, in recent years, the Department of Justice (DOJ), particularly through the Southern District of New York (SDNY), has expanded its interpretation of this statute to include developers of decentralized protocols and privacy-enhancing software.

Lewellen, a developer of non-custodial crowdfunding software, argues that his work is fundamentally different from traditional money transmission. In a non-custodial model, the developer provides the code—the "tools"—but never takes possession, custody, or control of the users’ funds. The user interacts directly with a blockchain or a decentralized network. Lewellen contends that by treating the mere act of writing and publishing this code as a financial service, the government is overstepping its statutory authority and infringing upon protected speech.

The Shadow of Tornado Cash and Samourai Wallet

The urgency of Lewellen’s filing is driven by a series of high-profile prosecutions that have sent shockwaves through the global developer community. The most notable among these are the cases against the creators of Tornado Cash and Samourai Wallet.

In the Tornado Cash case, the DOJ alleged that the developers were responsible for the illicit funds that passed through the privacy protocol, despite the developers not having control over the smart contracts once they were deployed to the Ethereum blockchain. Similarly, the founders of Samourai Wallet were charged with operating an unlicensed money transmitting business for providing software that allowed users to obfuscate their transaction history.

These cases represent a paradigm shift in federal enforcement. Previously, the Financial Crimes Enforcement Network (FinCEN) guidance from 2013 and 2019 suggested that "software providers" who do not accept and transmit value were not considered money transmitters. The recent pivot by the SDNY to prosecute developers regardless of custody has created a "credible threat" of felony charges for anyone working on similar technologies. Lewellen’s brief argues that he should not have to "bet the farm" by continuing his work and risking a decades-long prison sentence just to find out if his interpretation of the law is correct.

A Chronology of Regulatory Shift

The tension between the crypto industry and federal regulators has been building for over a decade. A timeline of these developments illustrates the narrowing path for developers:

• March 2013: FinCEN issues its first major guidance on virtual currencies, distinguishing between "users," "administrators," and "exchangers." It notes that providers of anonymizing software are generally not money transmitters.
• May 2019: FinCEN clarifies that "un-hosted" or "non-custodial" wallet providers are not subject to the Bank Secrecy Act (BSA) requirements because they do not exercise "total control" over the value.
• August 2022: The U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctions the Tornado Cash smart contracts, the first time a piece of code rather than a person or entity was added to the SDN list.
• August 2023: Roman Storm, a co-founder of Tornado Cash, is indicted in the SDNY on charges including conspiracy to operate an unlicensed money transmitting business.
• April 2024: The founders of Samourai Wallet are arrested and charged under 18 U.S.C. § 1960.
• July 2026: Michael Lewellen files his opening brief in the Fifth Circuit, seeking clarity for all non-custodial software developers.

The Constitutional Arguments: Code as Speech

The most profound aspect of Lewellen’s brief is the assertion that software development is a form of expression protected by the First Amendment. This argument draws on a long-standing legal precedent established during the "Crypto Wars" of the 1990s. In the landmark case Bernstein v. Department of Justice, the Ninth Circuit ruled that computer source code is speech.

Lewellen’s brief quotes SEC Commissioner Hester Peirce, a frequent critic of "regulation by enforcement," who has stated, "Publishing code is speech, which the First Amendment protects." By threatening developers with prosecution for the act of publishing code, the government is effectively imposing a prior restraint on speech.

Furthermore, the brief invokes the Due Process Clause of the Fifth Amendment. Lewellen argues that the current application of 18 U.S.C. § 1960 is unconstitutionally vague. Under the "void for vagueness" doctrine, a law is unconstitutional if it does not provide a person of ordinary intelligence fair notice of what is prohibited. Because the DOJ’s current stance contradicts previous FinCEN guidance and the plain language of the statute (which implies "transmission" requires control of funds), developers are left in a state of legal limbo.

The Insufficiency of the "Blanche Memo"

The government has attempted to downplay the concerns of the developer community through administrative memos and public statements. The "Blanche Memo," a document often cited by the administration, provides internal guidance on prosecutorial discretion, suggesting that the DOJ is not interested in targeting "pure" software developers.

However, Lewellen’s brief dismisses these assurances as "woefully inadequate." The brief argues that a memo is not a law and can be rescinded or ignored by any individual prosecutor. It characterizes the government’s position as asking citizens to rely on "noblesse oblige"—the benevolence of those in power—rather than the certainty of the rule of law. As the brief states, "A society founded on the rule of law does not want individuals to ‘bet the farm’ by breaking the law first and vindicating their rights second."

Industry Reactions and Expert Perspectives

The crypto and privacy advocacy sectors have rallied behind Lewellen. Peter Van Valkenburgh, Director of Research at Coin Center, has highlighted that this case is not just about one developer, but about the fundamental architecture of the internet. If the government can criminalize the publishing of code that facilitates financial transactions, they could theoretically criminalize the publishing of any code that facilitates communication, file sharing, or data encryption.

Legal experts have noted that the Fifth Circuit is a strategic venue for this challenge. Known for its rigorous defense of individual liberties and its willingness to check executive overreach, the court may be more receptive to Lewellen’s arguments than the courts in the Second Circuit (where the SDNY cases are being tried).

"The government is attempting to expand a 20th-century anti-money laundering statute to cover 21st-century speech," said one legal analyst following the case. "If Lewellen wins, it provides a safe harbor for the entire open-source community. If he loses, the United States risks a massive ‘brain drain’ as developers move to jurisdictions with more favorable legal frameworks."

Broader Implications and Future Outlook

The outcome of Lewellen v. Department of Justice will have far-reaching implications for several key areas:

1. User Privacy: Privacy-preserving technologies rely on decentralized, non-custodial code. If developers are prohibited from creating these tools, the average citizen loses the ability to protect their financial data from hackers, corporate surveillance, and state overreach.
2. American Innovation: The U.S. has long been the hub for software development. A hostile legal environment could push the next generation of financial technology (DeFi) and privacy tech to Europe, Asia, or decentralized hubs.
3. The Definition of a "Financial Institution": A ruling in favor of the DOJ would effectively expand the definition of a financial institution to include anyone with a keyboard and an internet connection. This would impose impossible compliance burdens on individual hobbyists and small-scale developers.

As the Fifth Circuit prepares to hear the case, the eyes of the tech world are on Michael Lewellen. His call for a pre-enforcement judgment is a demand for a return to the principle articulated by John Adams: that we are a nation of laws, not of men. For Lewellen and the thousands of developers he represents, the right to write code and the right to privacy are two sides of the same coin—one that the U.S. legal system must now decide whether to protect or prosecute.

On July 2, 2026, software developer Michael Lewellen filed an opening brief in the U.S. Court of Appeals for the Fifth Circuit, marking a pivotal moment in the ongoing legal battle over the boundaries of software development, financial regulation, and constitutional rights. Lewellen is seeking a pre-enforcement judgment to clarify whether the act of writing and publishing non-custodial software constitutes "unlicensed money transmission" under federal law. Supported by the cryptocurrency advocacy group Coin Center, the case challenges the Department of Justice’s (DOJ) recent aggressive stance toward developers of privacy-preserving and decentralized financial tools.

The core of the legal dispute rests on 18 U.S.C. § 1960, a federal statute that criminalizes the operation of an unlicensed money transmitting business. For decades, this law was applied primarily to entities that took physical or digital custody of third-party funds, such as banks or traditional money transmitters. However, recent prosecutions in the Southern District of New York (SDNY) have expanded this interpretation to include developers of decentralized protocols who never hold or control user assets. Lewellen’s brief argues that this expansion creates a "chilling effect" that forces law-abiding developers to abandon their work or face the threat of life-altering felony charges.

The Legal Context: 18 U.S.C. § 1960 and the Shift in Prosecution

To understand the gravity of Lewellen’s filing, one must examine the evolution of money transmission laws in the United States. 18 U.S.C. § 1960 was designed to prevent the rise of underground banking systems that could be used for money laundering or financing illicit activities. Traditionally, the Financial Crimes Enforcement Network (FinCEN) has defined a money transmitter as someone who accepts currency or funds from one person and transmits them to another location or person by any means.

The critical distinction in previous decades was "custody." If a service provider held a user’s funds, they were a transmitter. If they merely provided the tools—such as a wallet software or a communication protocol—they were considered "exempt" or outside the scope of the law. This distinction allowed the early internet and the first decade of the cryptocurrency industry to flourish.

However, starting in late 2023 and accelerating through 2024 and 2025, the DOJ began a series of high-profile prosecutions that signaled a departure from this standard. The cases against the founders of Tornado Cash and Samourai Wallet served as the catalyst for Lewellen’s preemptive legal action. In those instances, the government argued that even though the developers did not have control over user funds, the mere act of creating and maintaining the software that facilitated private transactions made them "money transmitters."

The Case of Michael Lewellen: Crowdfunding and the Fear of Publication

Michael Lewellen is an independent software developer who has designed a non-custodial crowdfunding platform. Unlike traditional platforms like Kickstarter or GoFundMe, Lewellen’s software uses smart contracts to allow users to raise funds directly from contributors without an intermediary ever touching the money.

In his brief, Lewellen explains that while his software is ready for deployment, he has refrained from publishing, maintaining, or marketing it due to a "well-founded fear" of prosecution. He argues that under the current interpretation favored by the SDNY, his role as the author of the code could be misconstrued as operating an unlicensed money transmitting business.

The brief emphasizes that Lewellen is not a criminal seeking to evade the law, but a citizen seeking to follow it. By asking for a pre-enforcement judgment, he is requesting the court to rule on the legality of his actions before the government can initiate a criminal case. The brief famously quotes: “A society founded on the rule of law does not want individuals to ‘bet the farm’ by breaking the law first and vindicating their rights second.”

A Chronology of the "Chilling Effect" in Crypto Development

The path to the Fifth Circuit has been paved by a series of regulatory and legal escalations:

• August 2022: The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctions the Tornado Cash smart contracts, marking the first time a piece of autonomous code was placed on a sanctions list.
• August 2023: The DOJ indicts Tornado Cash founders Roman Storm and Roman Semenov, alleging conspiracy to commit money laundering and unlicensed money transmission.
• April 2024: The founders of Samourai Wallet, Keonne Rodriguez and William Lonergan Hill, are arrested and charged with operating an unlicensed money transmitting business. The government’s theory again focuses on the provision of privacy software.
• Late 2025: The "Blanche Memo" is circulated within the administration. While the memo suggested a more lenient approach toward developers, it lacked binding authority and failed to provide a concrete legal "safe harbor" for non-custodial software authors.
• July 2, 2026: Michael Lewellen files his opening brief in the Fifth Circuit, seeking a definitive ruling to protect the act of publishing code.

Constitutional Arguments: Code as Speech and Due Process

At the heart of Lewellen’s argument are the First and Fifth Amendments of the U.S. Constitution. The First Amendment protects the right to free speech, and for nearly thirty years, U.S. courts have recognized that computer source code is a form of speech. In the landmark 1990s case Bernstein v. Department of Justice, the court ruled that software code is a medium of expression used by scientists and mathematicians, and thus deserves constitutional protection.

Lewellen’s brief argues that by criminalizing the publication of software, the government is engaging in a "prior restraint" on speech. SEC Commissioner Hester Peirce has echoed this sentiment in several public dissents, stating, "Publishing code is speech, which the First Amendment protects." The brief asserts that if the government wishes to regulate the use of technology, it must do so without infringing on the right to write and share the underlying logic of that technology.

Furthermore, the Fifth Amendment ensures "Due Process," which requires that laws be clear enough for an ordinary person to understand what is prohibited. Lewellen argues that the current application of 18 U.S.C. § 1960 is unconstitutionally vague. If a developer cannot determine whether their project will land them in federal prison until after they are indicted, the law fails to provide the requisite notice required by the Constitution.

Official Responses and the "Noblesse Oblige" Problem

The federal government’s response to these concerns has been characterized by many in the tech industry as "unreliable." While some administration officials have issued statements suggesting that "pure" software development is not a target, the DOJ has repeatedly refused to issue formal guidance or admit in court that non-custodial development is legal.

Lewellen’s brief addresses this directly, criticizing the government’s reliance on "prosecutorial discretion." The brief argues that law-abiding citizens should not have to rely on the "mercy of noblesse oblige"—the idea that they are safe only as long as the current administration chooses not to prosecute them. As political winds shift, so too can the priorities of the DOJ, leaving developers in a state of permanent legal peril.

Coin Center, the leading non-profit research and advocacy group focused on the public policy issues facing cryptocurrency, has been a vocal supporter of Lewellen. Peter Van Valkenburgh, Coin Center’s Director of Research, noted that the current environment is the "number one U.S. policy threat" to innovation. According to Van Valkenburgh, the weaponization of money transmission laws does more than just stop crypto projects; it undermines the fundamental privacy rights of every American who uses digital tools.

Broader Implications for Privacy and Innovation

The outcome of Lewellen v. Department of Justice (or the corresponding federal entity) will have far-reaching consequences beyond the world of Bitcoin and Ethereum. If the Fifth Circuit rules in favor of Lewellen, it would establish a critical precedent protecting open-source developers from being held liable for how third parties use their tools.

Conversely, if the government’s broad interpretation of money transmission is upheld, it could signal the end of American leadership in decentralized technology. Developers might flee to jurisdictions with clearer legal frameworks, such as Switzerland or Singapore, leading to a "brain drain" of technical talent.

Moreover, the case touches on the fundamental right to privacy. Privacy-preserving software, like the tools Lewellen seeks to build, is essential for protecting individuals from surveillance and data breaches. By categorizing the creation of these tools as a financial crime, the government effectively restricts the public’s access to privacy-enhancing technologies.

Analysis: A Nation of Laws, Not of Men

The brief concludes by invoking the words of John Adams: "We are a nation of laws, not of men." This principle suggests that the legality of an action should be determined by clear, written statutes and judicial interpretations, rather than the whims or "promises" of powerful officials.

For developers like Michael Lewellen, the quest is for certainty. In a digital age where code runs the global economy, the distinction between "writing a program" and "conducting a financial transaction" must be clearly defined. The Fifth Circuit now faces the task of determining whether the First Amendment remains a robust shield for the architects of the digital frontier, or whether the government’s power to regulate money will expand to encompass the very act of creative expression through code.

As the legal community and the technology sector watch closely, the Lewellen brief stands as a definitive statement on the rights of the individual against the expansive reach of the modern regulatory state. The decision rendered in this case will likely define the landscape of American innovation for the next generation.