Advocates in the crypto industry are engaged in a debate with regulators regarding whether a protocol’s code should be considered as free speech and what implications this has for liability. Lawmakers have accused the crypto industry of facilitating illegal activities, leading to court cases, arrests, and incarcerations. Recent examples include the arrests of developers working on Tornado Cash and Samurai Wallet, as well as the United States Securities and Exchange Commission’s planned enforcement action against decentralized exchange Uniswap. These cases have raised questions about developer liability and the concept of code as free speech. The Electronic Frontier Foundation played a crucial role in establishing code as protected speech under the First Amendment of the U.S. Constitution. However, there is disagreement within the crypto community about the extent of this protection. Some argue that code should be treated like any other form of expression, while others believe that once code is established as free speech, the government should have no power to regulate its use. The intention of the code’s creator is also important in determining whether it is protected under the First Amendment. If the code is created for illegal purposes, freedom of speech cannot be invoked. Regulators’ actions against developers have had a chilling effect on legitimate open-source projects, and there is a need to create a safe space for collaboration. However, financial regulators do have the power to regulate certain types of speech, such as insider trading. The recent cases in the crypto sector demonstrate the need for laws around speech to be narrowly tailored to avoid infringing upon other rights and interests. The removal of code and legal actions against developers can have negative consequences, including disrupting academic exploration, introducing uncertainty, and deterring investment. While code has been established as free speech, its legal status is not fixed and can change. It is important for courts to evaluate whether regulators’ actions are in line with the First Amendment and their goals. The ongoing cases of Tornado Cash, Samurai Wallet, and Uniswap will test the boundaries of freedom of speech on code.
Tornado Cash developers cannot rely on freedom of speech as an absolute defense.