In 2023 and 2024 the DOJ pursued investigations and brought crypto prosecutions that no one would have expected. They unjustly targeted non-custodial wallet and protocol developers and massively chilled innovation in our space. As we wrote at the time:
It’s one thing to do “regulation by enforcement,” as we’ve arguably seen from the SEC. It’s even worse to see the DOJ engage in regulation by criminal prosecution.
That’s exactly what is happening with the unlicensed money transmission charges against Tornado Cash and Samourai… https://t.co/9BFV8c67Q1
— Peter Van Valkenburgh (@valkenburgh) April 29, 2024
This past January, we announced our support for a lawsuit by Coin Center Fellow Michael Lewellen challenging the DOJ’s chilling interpretation of unlicensed money transmission laws for lack of statutory authority, due process, and first amendment deficiencies. As we said then, Michael should be free to build and publish his software without fear of further regulation by prosecution.
This week, the Deputy Attorney General issued a memo ending “regulation by prosecution.” The memo answers our ongoing criticism and Lewellen’s lawsuit. It says the DOJ will no longer target developers of cryptocurrency tools for some users’ actions or inadvertent regulatory violations. That’s what we’ve long called for, but the fight isn’t over.
The memo isn’t binding on future administrations. We’ll continue pushing for statutory clarity in Congress, like Whip Emmer’s BRCA, and for appropriate and binding judicial precedent. Whether and how the government’s memo has implications for Lewellen’s case still needs to be worked out, and we’re strategizing our next steps. Meanwhile, the Tornado Cash and Samourai Wallet prosecutions should be dropped, they are prime examples of the sort of regulation by prosecution that the Deputy Attorney General has rightly impugned. We’ll continue supporting the defense in those cases and are planning a joint amicus brief with the Bitcoin Policy Institute in Samourai this May.
A Third Case That Must Be Dropped: Peraire-Bueno
The DOJ’s case against Anton and James Peraire-Bueno is another misguided example of regulation by prosecution. The brothers allegedly earned $25 million by exploiting a vulnerability in MEV-Boost—open-source software for Ethereum staking—and are charged with conspiracy, wire fraud, and money laundering.
Here, the DOJ targets validators rather than developers, but the principle is the same. Validators are digital infrastructure providers, not fiduciaries. They have no regulatory duties to third parties. Penalizing them for failing to meet vague expectations violates due process and discourages innovation.
Validators Are Neutral Infrastructure
Validators are like ISPs or electric utilities: they execute protocol-defined rules automatically and without discretion. They are meant to act in their own economic interest, and Ethereum’s design anticipates that behavior. MEV (Miner Extractable Value) arises naturally from this structure and is not prohibited by law or protocol.
The DOJ’s theory would impose liability on validators for disrupting other actors’ expected MEV profits. But validators owe no duty to preserve those expectations. Their only obligation is to build blocks. Criminalizing this neutral, rules-based behavior would inject uncertainty and chill participation.
The “Theft” Narrative Breaks the Model
The DOJ alleges the Peraire-Bueno brothers “stole” from MEV bots by gaining early access to transaction data. In reality, they used public tools and data to outcompete others—a novel but legitimate strategy within the protocol’s rules.
That’s not theft; it’s competition. Ethereum does not ban exploiting MEV inefficiencies—it incentivizes it. If reform is needed, the fix lies in protocol design, not criminal prosecution.
Calling this wire fraud misunderstands both MEV and legal standards. Validators are strangers in open competition. Inferring a duty between them is like accusing someone of wrongdoing for opening a better pizza parlor across the street and driving their competitor out of business. In common law, that’s damnum absque injuria—harm without legal injury—and it’s not actionable.
MEV extraction is a regrettable but expected part of block validation. Selectively criminalizing successful actors distorts the neutrality of Ethereum’s base layer and misrepresents the nature of validator competition. If the government wants to outlaw this activity, it must do so prospectively with new laws—not by stretching wire fraud statutes to retroactively criminalize open, competitive behavior.
A Threat to Open Blockchain Networks
Criminalizing block propagation behavior that conforms to protocol rules sends a dangerous message: neutral infrastructure operation could carry criminal liability based on unknown third-party expectations. That will chill validator participation and push operators offshore.
This case raises serious constitutional concerns: criminal penalties without clear legal notice or defined duties violate due process. The DOJ is holding a weak hand—no theft, no fraud, no legal duty, just aggressive prosecution of rule-following competition.
It’s time for the DOJ to dismiss this case—to apply its new policy consistently by abandoning Peraire-Bueno alongside Tornado Cash and Samourai.
Coin Center’s Commitment
We’re actively supporting the defenses of Tornado Cash and Samourai, and Lewellen’s civil challenge. We’ll continue standing with the Peraire-Bueno brothers and any others targeted for neutral participation in open networks. We thank the new administration for beginning to turn the ship—but we urge them to finish the job.