Coin Center Fellow Michael Lewellen has initiated legal action against the Department of Justice (DOJ) concerning their interpretation of unlicensed money transmission statutes. Coin Center is backing Lewellen in his case, which challenges what he describes as a "chilling interpretation" by the DOJ. According to Lewellen, "Michael should be free to build and publish the brilliant software he’s been working on—free from fear of unjust persecution."

Lewellen, a smart contract security expert, intends to release a protocol named Pharos for public goods fundraising on Ethereum. However, he fears potential prosecution under current DOJ interpretations. The protocol aims to facilitate assurance contracts, where funds are only released if specific goals are met.

The DOJ's prosecutions of developers in cases like United States v. Storm and United States v. Rodriguez have raised concerns among cryptocurrency developers about liability for unlicensed money transmission. In these cases, the DOJ argued that providing software enabling others to transfer money constitutes money transmission itself.

Coin Center argues that this interpretation contradicts FinCEN guidelines, which state that only entities with "total independent control" over user funds are considered money transmitters. An amicus brief submitted by Coin Center states: "For example, if someone drives his money from one place to another in a Ford truck, Ford does not 'transfer' or 'transmit' or 'accept' the money."

Lewellen's lawsuit presents three claims against the DOJ: lack of statutory authority for prosecution under current definitions of a “money transmitting” business; violation of First Amendment rights regarding code publication; and due process violations due to arbitrary enforcement.

In response to these legal actions, Coin Center remains committed to supporting Lewellen and advocating for changes in policy through collaboration with Congress and future administrations.