Texas entrepreneur sues Attorney General over crypto prosecution

On January 16, 2025, Michael Lewellen, a blockchain entrepreneur and fellow at Coin Center, filed a lawsuit against U.S. Attorney General Merrick Garland.

The suit seeks a declaratory judgment to protect Lewellen's forthcoming cryptocurrency crowdfunding project, Pharos, from potential prosecution for unlicensed money transmitting.

Lewellen's lawsuit claims that the Department of Justice (DOJ) has been unconstitutionally prosecuting software developers who create noncustodial cryptocurrency software.

This includes ongoing prosecutions against Tornado Cash (CRYPTO:TORN) developer Roman Storm and Samourai Wallet co-founder Keonne Rodriguez.

Lewellen argues that these prosecutions violate the First and Fifth Amendments.

He contends that the DOJ's actions "betray its own representations to the public," stating that developers without "total independent control over the value" being moved should not be classified as money transmitters.

His project, Pharos, is designed as a crypto-based crowdfunding platform similar to Kickstarter.

Built on Ethereum (CRYPTO:ETH), it will utilise "assurance contracts" to ensure that donors receive their funds back if the project is not fully funded.

Lewellen emphasises that he will never have control over the cryptocurrency that goes through Pharos and will only receive a predetermined fee from successful projects.

The lawsuit highlights growing concerns regarding government actions against crypto privacy software developers in both the U.S. and abroad.

As regulatory uncertainty continues, preemptive lawsuits like Lewellen’s are becoming more common among those in the cryptocurrency space seeking legal clarity and protection.