A coalition of 34 leading crypto companies, including Coinbase, Kraken, Ledger, Exodus, and Uniswap Labs, has issued an open letter to U.S. lawmakers, urging them to push back against the Department of Justice’s (DOJ) interpretation of laws that have led to criminal charges against open-source web3 developers like those behind Tornado Cash.
Released on March 26, the letter calls on Congress to clarify the legal definition of a “money transmitting business,” challenging the DOJ’s stance that the creation of non-custodial software tools—such as privacy-focused crypto mixers—could amount to unlicensed money transmission under current law.
“Under this interpretation, essentially every blockchain developer could be prosecuted as a criminal,” the letter warns, describing the DOJ’s approach as “unclear,” “unfair,” and a threat to innovation in the U.S. software development space.
The Legal Grey Zone
The controversy centers on the Tornado Cash case, where developers Roman Storm and Roman Semenov were charged in 2023 with money laundering for their roles in creating the Ethereum-based privacy protocol. Although the letter does not name them directly, its timing and content clearly respond to the case.
The DOJ has argued that building and deploying open-source crypto software could constitute participation in an unlicensed money transmitting business. However, the letter counters that interpretation, pointing out that U.S. law defines such a business as one that possesses and operates other people’s funds. Developers of decentralized, non-custodial platforms like Tornado Cash do neither.
“Platforms like Tornado Cash are decentralized, open-source, and not businesses,” the letter explains, noting that developers cannot be liable for actions taken by users of software they neither control nor profit from.
Backlash and Industry Concerns
The crypto industry sees the DOJ’s approach as a dangerous precedent that criminalizes innovation. Many fear this interpretation could be used to target any developer writing open-source code that enhances privacy or user autonomy.
The letter follows the Treasury Department’s March 21 decision to lift sanctions on Tornado Cash, though it remains cautious about its use by North Korean hackers. Despite the sanctions being removed, the DOJ’s legal interpretation remains a looming threat for developers.
Crypto figures like Edward Snowden have criticized the DOJ’s enforcement actions. Snowden argued the government is prosecuting developers instead of criminals, calling it “an insult to privacy” and a threat to free software innovation. CryptoQuant CEO Ki Young Ju echoed the sentiment, comparing the situation to prosecuting knife inventors rather than those who misuse knives.
Tornado Cash and Beyond
The concern isn’t limited to Tornado Cash. Developers of Samourai Wallet, another privacy-focused crypto tool, have also been indicted on similar grounds. Their arrest has amplified calls for clearer regulations that distinguish between software development and criminal facilitation.
Despite the legal setbacks, some developers and users continue to support Tornado Cash. But cybersecurity experts have warned the protocol’s frontend may still be compromised by malicious code—potentially putting user funds at risk.
Call for Congressional Action
The coalition’s letter is not just a defense of past projects but a proactive request for Congress to protect the future of open-source blockchain innovation in the U.S.
“If left unaddressed, this regulatory ambiguity will drive talent overseas,” the letter concludes, pressing lawmakers to ensure developers are not unfairly criminalized for building privacy tools or decentralized technologies.
As the U.S. struggles to balance regulation and innovation, the crypto industry is making it clear: open-source code is not a crime—and protecting it is essential to the future of decentralized finance.
