Crypto Industry Fights Back: Urgent Call for DOJ Rule Change After Tornado Cash Case

The cryptocurrency industry is rallying against a Department of Justice (DOJ) interpretation of money-transmitting laws, arguing it’s unfairly targeting developers. A powerful coalition of 34 crypto companies and advocacy groups, including prominent names like Kraken and Coinbase, has sent a letter to Congress demanding a change.

This urgent appeal, spearheaded by the DeFi Education Fund, follows the DOJ’s controversial prosecution of Tornado Cash developers Roman Storm and Roman Semenov. The coalition claims the DOJ’s expansive interpretation of the law, outlined in a March 26 letter here, effectively criminalizes blockchain development.

The letter argues that the DOJ’s actions create significant uncertainty and stifle innovation within the US crypto sector. It highlights the inconsistency between the DOJ’s interpretation and existing guidance from the Financial Crimes Enforcement Network (FinCEN), stating that the DOJ’s stance ignores established precedent and could lead to the prosecution of nearly every blockchain developer.

The case against Storm and Semenov is far from isolated. The DOJ has pursued similar charges against Samourai Wallet co-founders, further intensifying concerns within the industry. Storm, who has pleaded not guilty and is seeking to have the charges dropped, highlights the potential for devastating consequences for developers simply for creating software.

The industry’s central argument revolves around the interpretation of Title 31 section 5330 and Title 18 section 1960. The coalition points to FinCEN’s 2019 guidance, which explicitly states that developers who do not control user funds are not operating money transmitting businesses. The DOJ’s interpretation, however, disregards this guidance, creating a significant legal conflict.

This situation is further complicated by a separate lawsuit filed by Coin Center fellow Michael Lewellen against Attorney General Merrick Garland. Lewellen’s suit challenges the DOJ’s actions and seeks to establish a legal precedent protecting non-custodial software developers from prosecution.

The stakes are undeniably high. The crypto industry’s call for Congressional intervention is a desperate attempt to prevent a chilling effect on innovation and to clarify the ambiguous legal landscape facing developers within the United States. Failure to address this issue could significantly harm the US position in the global cryptocurrency market.