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Today, Acting Assistant Attorney General (AAAG) of the Criminal Division of the Department of Justice (DoJ) Matthew Galeotti delivered a presentation at an event organized by the American Innovation Project where he emphasized that the DoJ will no longer pursue legal action against open-source crypto developers who do not intend to engage in illegal activities.
AAAG Galeotti initiated his presentation by informing the audience that Deputy Attorney General (DAG) Todd Blanche had requested him to address the audience regarding the DoJ’s commitment to “fair enforcement of the law” in the realm of digital assets.
During AAAG Galeotti’s address, he referred to a memo issued by DAG Blanche in April, where DAG Blanche declared that the DoJ would cease its enforcement-based regulatory strategy, as promoted by the Biden administration, concerning the crypto sector and crypto developers.
AAAG Galeotti reiterated and emphasized several points from the Blanche memo, creating numerous quotable moments throughout.
Here are some key highlights he made:
“The Department will not leverage federal criminal laws to create a new regulatory framework for the digital asset sector. The department will not use indictments as a legislative mechanism. The Department cannot keep innovators uncertain about what may result in criminal charges.”
“We believe that simply coding without malicious intent is not a violation of the law. Innovating new methodologies for the economy to store and transfer value and generate wealth without malicious intent is not a crime.”
“In general, creators of neutral tools, with no criminal intent, should not be held liable for the misuse of those tools by others. If a third-party misuses them in a way that breaches criminal law, that third-party should face prosecution — not the well-meaning developer.”
Notable figures from the crypto sector shared some of these encouraging quotes on X:
While other prominent industry figures expressed their doubts, highlighting some of the statements from AAAG Galeotti’s address that raised concerns:
Having listened to the presentation myself, I’d like to say I left it feeling hopeful, or at least cautiously hopeful. (Perhaps I feel a hint of the latter.)
However, primarily, I am filled with a reasonable skepticism, resembling Van Valkenburgh’s perspective, as it appears that AAAG Galeotti kept the door ajar for potential prosecutorial overreach by the DoJ.
In other terms, I suspect that individuals like the Samourai developers and Roman Storm, co-founder of Tornado Cash, would still face prosecution following this address, particularly based on some apprehensive remarks AAAG Galeotti made toward the latter part of it.
These remarks incorporated the following (non-italicized segments of quotes are included for context):
“If a developer simply contributes code to an open-source initiative without the explicit intent to facilitate criminal activity, assist in a designated crime, or be part of a criminal conspiracy, he or she is not criminally accountable.”
“As highlighted in the DAG memo, the Justice Department will not pursue regulatory violations in instances involving digital assets, such as unlicensed money transmission under 1960(b)(1)(A) or (B), unless there is evidence that a defendant was aware of the specific legal obligations and willfully breached them. [However] we might, under certain conditions, initiate actions under 1960(b)(1)(C), which forbids the transmission of funds that the defendant is aware are derived from illegal activities or are intended to support unlawful actions.”
“When the evidence demonstrates that software is genuinely decentralized and solely facilitates peer-to-peer transactions, and when a third party does not have custody and control over user assets, new 1960(b)(1)(C) accusations against a third party will not be sanctioned. However, if criminal intent is evident, other charges might be suitable — all of the subject’s actions and the services they provide end-to-end will be evaluated.”
Having covered both the Samourai Wallet and Tornado Cash cases, I observed much of the “evidence” referenced to illustrate criminal intent for the developers in both scenarios.
A considerable amount of it pertained to the developers’ responses to bad actors employing the software they had developed in nefarious activities, including occasions where they appeared to be trolling.
The most notable instance being when the Samourai developers invited Russian oligarchs to utilize their service to bypass sanctions:
Now, to be straightforward, one of the crucial lessons that crypto developers should glean from the Samourai and Tornado Cash cases is never jest about bad actors utilizing your service.
That said, it’s not unlawful to joke about it, and in the case of Roman Storm, he took measures to prevent bad actors from exploiting Tornado Cash, including deploying a Chainalysis oracle on the front end of Tornado Cash.
But I’m slightly deviating from the topic here…
The point I aim to make is that AAAG Galeotti’s remarks regarding criminal intent can be broadly construed, and, because of this, they overshadow many of the more optimistic statements he made about the DoJ’s lack of intent to prosecute crypto developers.
Thus, I concur with Van Valkenburgh that we need to keep urging Congress for safe harbor through the language in the Blockchain Regulatory Certainty Act (BRCA), some of which has been integrated into the recent draft of the CLARITY Act, and continue to fight critical battles in court.
Because, even after this apparently favorable discussion from AAAG Galeotti, developers remain at risk.
This article is a Take. The views expressed are solely those of the author and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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