Coin Center warns that despite pro-crypto rhetoric from the Trump administration, active federal prosecutions of privacy-focused crypto developers continue unresolved.
Coin Center has issued a sharp rebuke of the Trump administration’s crypto policy, arguing that pro-industry rhetoric from the White House has failed to stop federal prosecutors from pursuing criminal cases against privacy-focused cryptocurrency developers. The nonprofit policy group warns that developers of non-custodial tools face a legal dilemma: verbal assurances of leniency that carry no binding force, paired with active prosecutions that treat writing code as a federal crime.
Coin Center Flags the Gap Between Trump’s Pro-Crypto Promises and Active Prosecutions
Peter Van Valkenburgh, Coin Center’s executive director, published a detailed policy analysis characterizing the administration’s posture as one of rhetorical friendliness paired with continued enforcement. The critique centers on a specific document: Deputy Attorney General Todd Blanche’s April 7, 2025 memo titled “Ending Regulation by Prosecution,” which directed DOJ prosecutors not to bring charges for regulatory violations in digital asset cases, including unlicensed money transmission.
The memo appeared to signal exactly what the crypto industry wanted. It explicitly named the charge category used against privacy tool developers and instructed prosecutors to stand down.
But what followed contradicted the memo’s stated purpose. DOJ prosecutors continued pursuing criminal cases against the developers of Tornado Cash and Samourai Wallet, both charged with operating unlicensed money transmitting businesses. Van Valkenburgh described these ongoing prosecutions as continuing “the very regulation by prosecution ostensibly disclaimed by the DAG memo.”
We will wait to see what happens with the Tornado Cash and Samourai Wallet prosecutions. But the memo from the Deputy Attorney General yesterday is right on target: we should be going after bad guys. Not the developers of good tools that bad guys happen to use. pic.twitter.com/h8taM5BvGm
— Peter Van Valkenburgh (@valkenburgh) April 8, 2025
Source: @valkenburgh on X
The contradiction is not a matter of bureaucratic delay. DOJ prosecutors explicitly stated they would continue the Roman Storm prosecution despite the Blanche Memo, making the decision an active policy choice rather than institutional inertia. This gap between stated policy and enforcement reality represents a concrete regulatory risk for anyone building or investing in privacy-adjacent crypto projects.
The Cases That Prove the Point: Tornado Cash and Samourai Wallet
Roman Storm, co-founder of Tornado Cash, was convicted in August 2025 on conspiracy to operate an unlicensed money transmitting business. The jury deadlocked on the more serious money laundering and sanctions conspiracy charges. Rather than accept the partial outcome, DOJ filed to retry Storm on the deadlocked counts.
The Samourai Wallet developers faced a similar trajectory. They reached a guilty plea on money transmission charges in 2025; only one of two unlicensed money transmission counts was dropped, leaving the developers convicted despite the Blanche Memo’s stated policy of ending regulation by prosecution.
What makes these cases particularly striking is that FinCEN’s own 2019 guidance explicitly states that non-custodial software developers who never take custody of user funds are not money service businesses and do not require a money transmission license. Coin Center documented how prosecutors ignored this guidance when charging both sets of developers. Van Valkenburgh wrote that the organization is “frankly, sick of seeing it ignored by prosecutors.”
The charges in both cases rest on a legal theory that writing and deploying non-custodial software constitutes operating a money transmitting business. This interpretation conflicts with the regulatory agency’s own published guidance, yet DOJ has not reconciled the two positions. For crypto investors already navigating volatile market conditions and liquidation events, the unresolved legal framework adds a distinct layer of regulatory uncertainty.
The Catch-22: Verbal Promises Block Legal Protection but Don’t Stop Prosecution
Coin Center attempted to resolve the ambiguity through the courts. The organization backed a civil lawsuit, Lewellen v. Garland, seeking a judicial ruling that non-custodial software developers are not money transmitters under the Bank Secrecy Act.
The result exposed the core dilemma. Trump’s DOJ refused to concede in court that developers like Lewellen are not money transmitters, denying the very legal clarity the administration had promised verbally. Yet Judge Reed O’Connor dismissed the lawsuit on standing grounds, reasoning that the government’s public statements about non-prosecution meant no “real threat” existed to the plaintiff.
The logic creates a perfect trap. The administration’s pro-crypto rhetoric is strong enough to convince a federal judge that developers face no legal threat, but too weak to actually stop prosecutors from bringing criminal charges. Developers cannot get judicial protection because the government says it won’t prosecute them, but the government continues prosecuting them.
What Privacy Developers Are Actually Supposed to Do Now
The central legal question remains unresolved: are non-custodial privacy tools money transmitters under federal law? No court has issued a binding ruling that settles this, no executive order has codified the Blanche Memo’s promises, and FinCEN’s 2019 guidance has proven insufficient to constrain prosecutors.
Coin Center is pursuing two legislative fixes. The Blockchain Regulatory Certainty Act (BRCA) would codify into statute what FinCEN’s 2019 guidance already says: that non-custodial developers are not money transmitters. The organization is also pushing the KYCA (Know Your Customer Act alternative) as a companion measure.
On the judicial front, Coin Center has filed court briefs in the Roman Storm case, attempting to establish precedent through the criminal proceedings themselves since the civil path was blocked. The outcome of Storm’s retrial on the deadlocked counts will be a significant marker for whether developing privacy tools carries criminal liability. Across the broader market, where assets like XRP face their own technical pressure, this kind of regulatory ambiguity compounds risk for participants at every level.
Van Valkenburgh’s analysis points to what he calls a “split personality” on surveillance policy within the administration. The President’s Working Group produced a 168-page report on digital assets, and FinCEN received 2,200 public comments on its mixer rulemaking. Yet none of this activity has produced the binding legal clarity that would let developers operate without fear of prosecution.
For builders and investors evaluating risk, the takeaway from Coin Center’s analysis is concrete: political rhetoric is not a legal safe harbor. Until Congress passes legislation like the BRCA or a court issues a definitive ruling on non-custodial software, privacy tool developers remain exposed to the same charges that convicted Roman Storm and the Samourai Wallet team.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
