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Breaking News: Will Trump Pardon Sam Bankman-Fried? Polymarket Odds Surge as Traders React to CZ’s Release
DeFi

DOJ Makes It Clear: Writing Defi Code Won’t Land You In Jail

Christian Encila
by Christian Encila
2 months ago
·
Posted in Crypto News
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

In a major policy shift, federal prosecutors are changing how they approach decentralized finance, or Defi.

After years of uncertainty around liability for coders and software developers, officials are now drawing a clear line between creating technology and committing a crime.

The US Justice Department has announced it will no longer target software developers who build Defi platforms without proof of criminal intent.

Related Reading: Ethereum Now Carries Tokenized Notes From Singapore’s Largest Bank

Acting Assistant Attorney General Matthew Galeotti made the remarks Thursday during a digital assets summit in Wyoming. He said that writing code alone does not constitute a crime.

This signals a significant change from earlier enforcement strategies where prosecutors charged developers for operating unlicensed money transmission businesses.

Debate Over Money Transmission Rules

Regulators have long applied stringent rules to companies in the money remittance business, but the rise of Defi systems is putting those standards to the test.

Traditional payment platforms face clear obligations, while DeFi projects say those same rules don’t make sense in a code-driven environment.

Money transmitters such as PayPal and Cash App must secure licenses and comply with anti-money laundering obligations. They also have to verify customers and report suspicious transactions.

But decentralized exchanges argue these rules don’t fit their model since they have no control over user activity on their platforms.

NEW: US DOJ’S ACTING AAG MATTHEW GALEOTTI SAYS “OUR VIEW IS THAT MERELY WRITING CODE, WITHOUT ILL INTENT, IS NOT A CRIME. INNOVATING NEW WAYS FOR THE ECONOMY TO STORE AND TRANSMIT VALUE AND CREATE WEALTH, WITHOUT ILL INTENT, IS NOT A CRIME”https://t.co/iyGVBr0BCZ

— DEGEN NEWS (@DegenerateNews) August 21, 2025

Source: Getty Images

On Defi, Hiding Money & Ill Intent

The issue came under the spotlight after a New York jury recently convicted Roman Storm, co-founder of Tornado Cash, on conspiracy charges linked to operating an unlicensed money transmitting business.

Tornado Cash is a privacy service specifically designed to make Defi and cryptocurrency transactions more difficult to trace.

Jurors could not reach a decision on whether Storm committed money laundering or violated sanctions.

Prosecutors said the service allowed illicit finance, while critics of the case argued Storm had only written code.

Total crypto market cap currently at $3.7 trillion. Chart: TradingView

Prosecutors Will Prioritize Evidence Of Intent

According to Galeotti, future cases in the Defi and crypto space will require proof that a developer knowingly aided fraud, sanctions evasion, or laundering.

“Innovating new ways for the economy to store and transmit value and create wealth, without ill-intent, is not a crime,” he said.

He added that laws banning unlicensed money transmission will not apply to developers unless there is evidence of deliberate wrongdoing.

Related Reading: First Of Its Kind: Ripple Helps Build Real-Time Crypto Crime Response System

The focus of the US justices will remain on fraud, Ponzi schemes, and global laundering networks, including those based in China and other countries suspected of carrying out illicit transactions.

Featured image from Getty Images, chart from TradingView

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Christian Encila

Christian Encila

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Christian, a journalist and editor with leadership roles in Philippine and Canadian media, is fueled by his love for writing and cryptocurrency. Off-screen, he's a cook and cinephile who's constantly intrigued by the size of the universe.

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