Michael Lewellen has filed a notice of appeal in the case Lewellen v. Garland to the U.S. Court of Appeals for the Fifth Circuit, seeking review of a district court decision on March 25 that dismissed his lawsuit. Coin Center said on Apr. 6 it will continue to support Lewellen’s efforts.
The issue at stake is whether publishing non-custodial software can make a developer a money transmitter under federal law, an unresolved question after the district court dismissed the case based on standing rather than substance. The court held that Lewellen did not face a “credible threat of prosecution.”
Coin Center criticized this conclusion, saying, “We believe that conclusion is wrong.” The organization also noted concerns about reliance on Department of Justice policy memos: “The court relied heavily on a recent Department of Justice policy memo suggesting prosecutors will deprioritize certain cases involving non-custodial software. But policy memos are not law. They are non-binding, can be changed at any time, and do not eliminate the underlying legal risk created by an overbroad interpretation of the statute.”
Lewellen and Coin Center pointed out that criminal cases have already been brought against developers working with non-custodial privacy tools, arguing this demonstrates there is indeed credible risk for developers and justifies judicial review before enforcement actions occur.
“The district court’s ruling effectively creates a Catch-22: developers cannot challenge the law unless they first risk felony prosecution,” Coin Center said.
Coin Center promotes values such as open standards, federated trust, personal privacy and individual freedom in digital identity and cryptocurrency policy arenas according to its official website. The group works through research, education and advocacy to protect individuals’ rights to develop and use open cryptocurrency networks—including rights related to code publication and privacy according to its official website. Led by executive director Peter Van Valkenburgh with support from staff covering various areas including research and outside counsel according to its official website, Coin Center influences topics like consumer protection, financial surveillance, innovation policies and tax issues in cryptocurrency through advocacy and litigation according to its official website.
As an independent nonprofit focused on cryptocurrency policy according to its official website, Coin Center also provides educational resources explaining Bitcoin, blockchain technology and regulatory challenges according to its official website.
Looking ahead, Michael Lewellen asks the Fifth Circuit Court of Appeals "to reverse the dismissal and allow the case to proceed so that courts can finally answer the question that developers like Lewellen need answered: Are non-custodial software developers money transmitters under federal law?" Until then he says developers remain "in legal limbo: forced to choose between building and risking prosecution or staying silent."
