U.S. Justice Department Official Says Writing Code Without Bad Intent 'Not a Crime'

A senior official at the U.S. Department of Justice knew the crypto audience in Wyoming had fresh software developer convictions on its mind when he told them on Thursday that his department doesn't want to go after digital assets software developers who don't have money-laundering intentions.

Matthew Galeotti, acting assistant attorney general in the DOJ's criminal division, made those assurances at an event hosted by the new crypto group American Innovation Project, drawing vigorous applause.

"The department will not use federal criminal statutes to fashion a new regulatory regime over the digital asset industry," he said. "The department will not use indictments as a lawmaking tool. The department should not leave innovators guessing as to what could lead to criminal prosecution."

He added that "merely writing code without ill intent is not a crime."

Those sentiments arrive against the backdrop of a couple of recent courtroom developments in which U.S. prosecutors won convictions against crypto developers. Most prominently, Tornado Cash developer Roman Storm was found guilty of running an unlawful money transmitting business.

That followed closely on the heels of a plea agreement involving the developers behind Samourai Wallet pleading guilty to conspiracy to operate an unlicensed money transmitting business — a significantly lesser charge to what they'd originally faced.

Galeotti directly addressed concerns about that specific criminal code they were all convicted under. He said the DOJ wouldn't use it in crypto cases unless prosecutors have "evidence that a defendant knew of the specific legal requirements and willfully violated it."

He said new charges won't be pressed under that code in cases in which "software is truly decentralized and solely automates peer-to-peer transactions, and where a third party does not have custody and control over user assets."

An April memo issued by Deputy Attorney General Todd Blanche had set out the stance of the department under the leadership appointed by U.S. President Donald Trump. It noted the national cryptocurrency enforcement team had been disbanded and said the DOJ would take a careful approach to crypto cases after the previous administration "created a particularly uncertain regulatory environment around digital assets." Despite the Blanche memo, the Southern District of New York (SDNY) pressed forward with their cases against Storm and the Samoruai Wallet developers.

"Developers of neutral tools with no criminal intent should not be held responsible for someone else's misuse of these tools," Galeotti said at the Thursday event, the first held by the AIP that was launched this week. "If a third party's misuse violates criminal law, then that third party should be prosecuted, not the well-intentioned developer."

The protection of crypto software developers has been a central lobbying point for the industry in its negotiations with lawmakers and regulators in Washington. The crypto market structure legislation currently moving through Congress has included protections of such developers, though the final version isn't yet set in the Senate.

"The fact that the DOJ acknowledged that software developers should not be held responsible for third parties' misuse of their code affirms what we have been advocating for years," said Amanda Tuminelli, executive director of the DeFi Education Fund, in a statement after Galeotti's remarks. "Let's celebrate this as a moment of progress and remember that there is still more work to be done to change the law permanently."

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