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Pharos developer Michael Lewellen said his lawyers are exploring all options for a path forward after a Texas judge dismissed the case without prejudice.A Texas court has dismissed a lawsuit filed by crypto developer Michael Lewellen, seeking a declaratory judgment that his software, Pharos, which facilitates donations to charitable crowdfunding campaigns, won’t be prosecuted for violating money-transmission laws.
In its dismissal, the court also cited a Department of Justice memo stating that it will no longer target virtual currency exchanges,“A non-binding DoJ memo is no substitute for real legal certainty,” added Lewellen.that developers of software similar to his product, such as those behind Tornado Cash and Samourai Wallet, have faced prosecution under these laws.However, Judge O’Connor argued that the “core conduct of those cases is money laundering.” “By contrast, the core conduct here would be running a business. And Lewellen disclaims any knowing transmission of criminal funds, which is central to the prosecutions he invokes,” Judge O’Connor wrote.Lewellen said his lawyers are exploring all options for a path forward. Judge O’Connor dismissed the case without prejudice, meaning Lewellen could pursue the same action again with certain corrections or modifications.the memo cited by Judge O’Connor “has not provided meaningful protection to developers, given the outcomes in the Tornado Cash and Samourai Wallet cases.” Both Valkenburgh and Lewellen have now called for Congress to pass the Blockchain Regulatory Certainty Act of 2026.to clarify that developers and providers of non-custodial software who do not control user funds are not subject to money transmitter laws.“So while I hope the court is right that non-custodial software developers are not at real risk, the Blanche memo is not enough to secure their rights. It is a vague enforcement signal, not a durable limit on government power,” Valkenburgh added. “Worse, the court has now used that vague signal as a reason not to provide actual judicial clarity on the scope of developer liability. Instead of a clear rule, developers get a revocable memo and a court telling them not to worry.”Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently. Read our Editorial Policy
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