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Texas Court Dismisses Lawsuit Filed by Cryptocurrency Donation Service Pharos, 2026/03/26 10:40:10
The Northern District Court of Texas has dismissed the lawsuit filed by crypto developer Michael Lewellen, who sought an official ruling that his Pharos software for charitable crowdfunding donations does not violate money transfer laws.
District Judge Reed O’Connor explained that Lewellen failed to demonstrate a genuine threat of criminal prosecution. The court determined that the developer’s concerns were hypothetical and not substantiated by any actions from authorities.
In reaching its decision, the court referenced an internal memorandum from the U.S. Department of Justice, which indicated that the agency does not intend to prosecute cryptocurrency exchanges, mixers, and non-custodial wallets for the actions of their users. Previously, U.S. Justice Department representative Matthew Galeotti stated that developers should not face criminal liability for creating code in the absence of criminal intent.
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Lewellen expressed that the Justice Department memorandum does not provide legal certainty, unlike a court ruling. He also conveyed disappointment that the court did not offer him legal protection. He cited the cases of Tornado Cash developer Roman Storm and the creators of the Samourai Wallet, Keonne Rodriguez and William Hill, who were found guilty of operating an unlicensed money transfer business.
The judge noted that in the cases of Tornado Cash and Samourai Wallet, the primary charges involved money laundering, whereas Lewellen’s situation pertains to a potential violation of money transfer legislation. Furthermore, the developer claims he is not involved in the intentional transfer of illegally obtained funds. The court did not identify a direct threat of prosecution and dismissed the lawsuit. Lewellen may refile it after making amendments.
Peter Van Valkenburgh, executive director of the advocacy organization Coin Center, stated that the Justice Department memorandum does not offer sufficient protection for developers, considering the outcome of the Samourai Wallet case. He urged Congress to pass the blockchain regulation bill introduced in January by Wyoming Senator Cynthia Lummis. The document stipulates that developers and providers of non-custodial software, who do not control user funds, are not subject to money transfer laws.
Previously, U.S. prosecutors requested a retrial for Roman Storm on charges of money laundering and violations of sanctions.
