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DOJ Halts 1960(b)(1)(C) Cases Against Decentralized Software Developers

DOJ Halts 1960(b)(1)(C) Cases Against Decentralized Software Developers

The U.S. Department of Justice confirmed it will not apply money transmission statutes to developers absent criminal intent, following Tornado Cash founder Roman Storm’s conviction, while states and regulators advance new cryptocurrency policy proposals.

Fact Check
Multiple recent sources, including a primary source from the Department of Justice itself, corroborate a new policy clarification. This clarification offers 'legal certainty' for developers of 'truly decentralized' software under 18 U.S.C. § 1960, which effectively halts prosecutions against this specific group. While older evidence confirms such prosecutions were an ongoing concern, the newest evidence from the DOJ points to this significant policy shift.
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Summary

The U.S. Department of Justice announced it will not pursue charges under Section 1960(b)(1)(C) against decentralized software developers unless criminal intent is demonstrated. The clarification comes shortly after the conviction of Tornado Cash co-founder Roman Storm. In addition to this policy update, several regulatory measures were reported, including a proposal in Pennsylvania to ban public officials from holding cryptocurrencies and broader updates on international crypto regulations.

Terms & Concepts
  • Section 1960(b)(1)(C): A U.S. statute addressing unlicensed money transmitting businesses that knowingly handle funds derived from crime or intended for unlawful use.
  • Decentralized software (DeFi context): Applications that automate peer-to-peer transactions without intermediaries, where no third party has custody or control over user assets.
  • Tornado Cash: A privacy-focused cryptocurrency mixer that obscures transaction origins and destinations, often cited in legal and regulatory debates over illicit finance.