The Trump administration has positioned itself as a champion of the cryptocurrency industry, rolling out permissive regulations and making repeated promises to protect software developers. However, a series of recent legal actions and a new court ruling are raising serious doubts about whether those commitments carry any practical weight. Advocates say the situation has left crypto privacy developers in a precarious and legally ambiguous position.
The Trump Justice Department pledged last year to halt prosecutions of developers who build crypto privacy tools — software designed to keep digital transactions anonymous. Despite those assurances, federal prosecutors subsequently sent two Bitcoin developers to prison for creating such software and brought a separate case against an Ethereum developer, Roman Storm, for building similar tools. Storm was convicted on one charge and acquitted on two others, but earlier this month the DOJ moved to retry him on the two counts on which he had been cleared.
Against that backdrop, a federal judge in Texas issued a ruling on Wednesday that privacy advocates say compounds their concerns. Judge Reed O’Connor dismissed a lawsuit filed by software developer Michael Lewellen, who argued he faced a credible risk of prosecution for building his own privacy tool. O’Connor ruled that because the Trump DOJ has publicly stated it does not intend to pursue crypto developers, Lewellen lacked the legal standing to claim a genuine threat of prosecution existed.
O’Connor’s decision rested on a distinction between Lewellen’s stated intentions and the conduct of developers previously targeted by the government. The judge determined that the prosecutions carried out so far centered on money laundering as the “core conduct,” whereas Lewellen maintained he planned to operate a legitimate business with no such intent. Because he did not plan to launder money, the judge concluded, he had no reasonable basis to fear charges.
Peter Van Valkenburgh, executive director of the crypto advocacy group Coin Center — which financially supported Lewellen’s lawsuit — argues that reasoning misses the point entirely. He contends that developers should not bear responsibility for how third parties ultimately use their software. Van Valkenburgh warns that Lewellen’s tools could foreseeably be used for money laundering by others, which could then expose him to prosecution regardless of his own intentions.
Van Valkenburgh told Decrypt that the DOJ’s inconsistent approach has placed policy advocates in a difficult position. By publicly declaring support for developers while still pursuing some of them in court, the department can, in his view, selectively target individuals while maintaining a pro-developer public image. “They can effectively go after developers when they want to go after them, and then claim to be pro-developer when they want to claim to be pro-developer,” he said.
Prosecutions of crypto privacy tool developers did not originate under the current administration. They began during the Joe Biden administration, which faced widespread criticism from the crypto industry for its skeptical stance toward digital assets. Van Valkenburgh acknowledges that developers may face somewhat less immediate risk under the current White House, but argues the DOJ’s lack of a consistent legal standard has made it harder to achieve the binding judicial clarity that would offer lasting protection. “That’s a very bad state of the world right now,” he said.
Originally reported by Decrypt.
