• The Department of Justice (DOJ) has clarified that certain regulatory violations such as unlicensed money transmitting, will not be charged as crimes absent proof of willfulness (evidence that the defendant knew of the requirement and intentionally violated it).

• DOJ guidance provides potential comfort for developers of decentralized software: the DOJ will decline new 18 U.S.C. § 1960(b)(1)(C) charges in specific circumstances against developers of tools that are truly decentralized, solely enable peer-to-peer transactions, and do not grant third-party custody or control over user assets, so long as no criminal intent is present.

• The DOJ remains committed to prosecuting bad actors particularly those with knowledge of criminal proceeds or who knowingly facilitate illicit activity underscoring the importance of robust compliance and monitoring protocols.

Background: AAG Galeotti’s Remarks

On August 21, 2025, Acting Assistant Attorney General Matthew R. Galeotti spoke at the American Innovation Project Summit in Jackson, Wyoming. His remarks built on the April 2025 “Blanche Memo,” which emphasized that DOJ prosecutors are “prosecutors, not regulators and not legislators.” The memo signaled an end to “regulation by prosecution” in the digital asset space meaning the DOJ would not pursue criminal cases based on inadvertent regulatory violations absent clear intent.

Mr. Galeotti reaffirmed this principle and provided additional guidance:

• Intent is central. Merely writing code without ill intent does not constitute a crime.

• Secondary liability requires intent. Developers contributing code to open-source projects cannot be found guilty absent specific intent to aid unlawful activity.

• Decentralization matters. The DOJ will not pursue new § 1960(b)(1)(C) charges against developers whose tools are non-custodial, automate only peer-to-peer transactions, and involve no third-party control of assets.

At the same time, Galeotti stressed that the DOJ would continue prosecuting cases where there is evidence of intent to facilitate criminal activity, including fraud, Ponzi schemes, and laundering of illicit proceeds through digital assets.

Key Enforcement Priorities

While providing clarity for developers and platforms, the DOJ also emphasized its ongoing enforcement priorities:

• Illicit finance and investor harm. DOJ continues to prioritize cases involving investment fraud, misappropriation, hacks, and misuse of smart contracts.

• Knowledge-based liability. Platforms aware of their services being used for illicit activity may still face charges under § 1960(b)(1)(C) or related statutes.

• High-profile prosecutions. Recent DOJ actions include prosecuting China-based money laundering syndicates, filing civil forfeiture actions against crypto-linked fraud proceeds, and charging individuals in Ponzi schemes involving AI-powered trading bots.
  
  

Compliance and Risk Management Guidance

For developers, platforms, and fintech companies, Mr. Galeotti’s remarks provide practical clarity but also highlight continuing risks. Companies should consider the following:

1. Prioritize Investor Protection

• Expect continued DOJ focus on cases involving fraud, hacks, and misuse of digital assets.

• Strengthen forensic capabilities, customer restitution plans, and referral procedures to law enforcement.

2. Document Decentralization and Lack of Custody

• Maintain records showing that tools are non-custodial, governance and key management are decentralized, and code automates peer-to-peer transactions without third-party control.

• Documentation may prove critical in demonstrating that a platform falls outside the DOJ’s charging priorities.

3. Manage Knowledge Risk

• Implement monitoring systems to identify red-flag activity.

• Document internal escalation processes and responses to illicit use.

• Recognize that knowledge of criminal use can be determinative in litigation outcomes.

4. Ensure Licensing and Registration Compliance

• Evaluate whether operations require registration under federal law e.g. Section 5330 of Title 31, U.S.C. or state money transmitter licensing regimes.

• Maintain up-to-date compliance programs to minimize exposure.

5. Account for the Mixed Regulatory Landscape

• While the DOJ may narrow its focus for good-faith innovators, state attorneys general remain active in crypto enforcement.

• Firms should incorporate both federal and state enforcement trends into their risk assessments.

Conclusion

The DOJ’s most recent statements provide reassurance for good-faith developers and platforms that are building decentralized, non-custodial tools without criminal intent. By signaling that “writing code, without ill intent, is not a crime,” the DOJ has sought to reduce uncertainty for innovators.

At the same time, companies must remain vigilant: the DOJ is not retreating from enforcement, particularly against those knowingly facilitating illicit activity. Developers and platforms should proactively implement compliance measures, document decentralization, and ensure licensing where required to protect themselves in this evolving landscape.

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