{"id":24452,"date":"2026-03-26T08:06:45","date_gmt":"2026-03-26T08:06:45","guid":{"rendered":"https:\/\/bitunikey.com\/news\/texas-judge-throws-out-crypto-software-liability-case\/"},"modified":"2026-03-26T08:06:53","modified_gmt":"2026-03-26T08:06:53","slug":"texas-judge-throws-out-crypto-software-liability-case","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/texas-judge-throws-out-crypto-software-liability-case\/","title":{"rendered":"Texas Judge throws out crypto software liability case"},"content":{"rendered":"<p><\/p>\n<div class=\"post-detail__content blocks\">\n<p><strong>A Texas federal court has dismissed a lawsuit filed by crypto developer Michael Lewellen, who sought a court ruling that his software would not violate US money-transmission laws.\u00a0<\/strong><\/p>\n<div id=\"cn-block-summary-block_ac02fa2302c0c9465b0b7ffe6b995807\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>Texas court dismissed Lewellen lawsuit citing no credible threat of prosecution tied to his software<\/li>\n<li>Judge referenced DOJ memo stating developers not targeted for user actions or unintended regulatory violations<\/li>\n<li>Coin Center urges Congress to pass bill clarifying non custodial developers are exempt from money laws<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<p>The case focused on Pharos, a tool designed to support donations to charitable crowdfunding campaigns. Chief US District Judge Reed O\u2019Connor <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.coincenter.org\/app\/uploads\/2026\/03\/41_Lewellen_re_MTD_3-25-2026.pdf\" target=\"_blank\" rel=\"nofollow\">dismissed<\/a> the case on Wednesday. The judge said Lewellen had not shown a credible threat of imminent prosecution tied to his software.<\/p>\n<p>Lewellen <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/x.com\/lewellenmichael\/status\/2036898867031998617?s=46&amp;t=MuRujqZUAz3TQE1vmr3c6A\" target=\"_blank\" rel=\"nofollow\">reacted<\/a> to the ruling on X. He wrote,\u00a0<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201dDisappointed to see the court dismiss my suit today.\u201d\u00a0<\/p>\n<\/blockquote>\n<p>The court dismissed the case without prejudice, which leaves room for Lewellen to file again after making changes.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<h1 class=\"wp-block-heading\"><strong>Judge points to DOJ memo and case differences<\/strong><\/h1>\n<p>In the ruling, the court also cited a Department of Justice memo. That memo said federal prosecutors will no longer target virtual currency exchanges, mixing services, tumbling services, or offline wallets for the acts of end users or for unwitting regulatory violations.<\/p>\n<p>Lewellen rejected that point as enough legal protection. He said,\u00a0<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201dA non-binding DoJ memo is no substitute for real legal certainty.\u201d\u00a0<\/p>\n<\/blockquote>\n<p>Judge O\u2019Connor also said the cases Lewellen relied on were not close matches to his own situation.<\/p>\n<p>In addition, Lewellen had argued that developers behind software such as Tornado Cash and Samourai Wallet faced prosecution under similar laws. He used those cases to support his claim that developers like him face a real legal risk.<\/p>\n<p>Judge O\u2019Connor said those prosecutions centered on money laundering. He wrote,\u00a0<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201dBy contrast, the core conduct here would be running a business.\u201d\u00a0<\/p>\n<\/blockquote>\n<p>He also said Lewellen denied knowingly transmitting criminal funds, which the judge described as central to the earlier cases.<\/p>\n<h2 class=\"wp-block-heading\"><strong>Coin Center and supporters push for legal clarity<\/strong><\/h2>\n<p>Lewellen said his legal team is reviewing its next steps. Coin Center, which backed the lawsuit, said the court\u2019s reliance on the DOJ memo does not resolve the broader issue for software developers.<\/p>\n<p>Coin Center executive director Peter Van Valkenburgh said,\u00a0<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201dThe Blanche memo is not enough to secure their rights.\u201d\u00a0<\/p>\n<\/blockquote>\n<p>He and Lewellen called on Congress to pass the Blockchain Regulatory Certainty Act of 2026, introduced by Senator Cynthia Lummis in January. The bill would state that developers of non-custodial software who do not control user funds are not subject to money transmitter laws.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>A Texas federal court has dismissed a lawsuit filed by crypto developer Michael Lewellen, who sought a court ruling that his software would not violate US money-transmission laws.\u00a0 Summary Texas&hellip;<\/p>\n","protected":false},"author":1,"featured_media":4705,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-24452","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/24452","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=24452"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/24452\/revisions"}],"predecessor-version":[{"id":24453,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/24452\/revisions\/24453"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/4705"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=24452"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=24452"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=24452"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}