Texas Judge Dismisses Crypto Dev's Lawsuit for DOJ Prosecution Protection

A Texas judge dismissed crypto developer Michael Lewellen's lawsuit seeking protection from prosecution before publishing noncustodial crowdfunding software on Ethereum.

Judge Reed O'Connor of the Northern District of Texas found Lewellen's argument unpersuasive, ruling he couldn't prove he would face charges for releasing the software. Lewellen had sued the US attorney general, arguing his planned software could expose him to up to five years in prison under money transmitting laws.

The decision lands despite Deputy Attorney General Todd Blanche's April 2025 memo stating prosecutors should not pursue crypto exchanges, mixers, and offline wallets for the acts of their end users or unwitting violations of regulations. Digital Chamber Director of Policy Jonathan Schmalfeld said the result was disappointing, adding that developer protections must be codified into law. He pointed to Tornado Cash developer Roman Storm, who a jury convicted in August 2025 of operating an unlicensed money transmitting business.

Judge O'Connor distinguished Lewellen's case from recent prosecutions of mixer developers. The judge said the core conduct of the Storm and Samourai Wallet cases is money laundering, while the core conduct in Lewellen's case would be running a business. Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill pleaded guilty in July 2025 to operating an unlicensed money transmitting business and received five years in prison.

Lewellen described his planned software as a tool that others can use to move money, like an envelope used to move checks in the mail. The software is noncustodial, meaning it will not give Lewellen any control, possession, or direction over cryptocurrency users put through it.

The Blockchain Association, DeFi Education Fund, and Solana Policy Institute filed supporting briefs in Lewellen's case, with Lewellen's lawyers exploring options for a path forward after the March 2026 dismissal.