A federal court in Texas dismissed the lawsuit filed by developer Michael Lewellen, who sought preventive legal protection for his non-custodial cryptocurrency software against federal money transmission laws. The decision was issued yesterday by Chief Judge Reed O’Connor of the Northern District of Texas, leaving unresolved the legal vacuum facing the crypto industry around the development of non-custodial tools.
Lewellen had developed Pharos, a software designed to facilitate donations to charitable crowdfunding campaigns. In January 2025, he filed a lawsuit arguing that registering as a money transmitter was impossible, given that the software’s privacy features prevented access to the user information required by law. He sought a judicial declaration of legality and an injunction against the enforcement of rules that criminalize operating an unlicensed money transmission business.
O’Connor determined that Lewellen failed to demonstrate a “substantial and imminent” threat of prosecution and noted that the Department of Justice cases cited by the developer involved money laundering, not the mere operation of a crypto software tool.
The case was dismissed without prejudice, meaning Lewellen could refile the lawsuit if circumstances change. The developer responded on X that his legal team is exploring options and called on Congress to pass the Blockchain Regulatory Certainty Act (BRCA), which would exempt non-custodial developers from being classified as money transmitters.
Source: https://www.coincenter.org/app/uploads/2026/03/41_Lewellen_re_MTD_3-25-2026.pdf
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