They pointed to a 2014 decision that said making software is not the same as handling money, and a 2019 rule said that you are only a money transmitter if you control the crypto.
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Paradigm Backs Roman Storm in Legal Battle Over Crypto Mixer
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Paradigm argued that prosecuting Roman Storm contradicts 2014 and 2019 FinCEN guidance, which states that software developers are not considered money transmitters unless they independently control user funds
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