{"id":11788,"date":"2025-05-06T07:34:27","date_gmt":"2025-05-06T05:34:27","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=11788"},"modified":"2025-05-06T07:34:27","modified_gmt":"2025-05-06T05:34:27","slug":"sdnys-evidence-withholding-poses-challenges-to-samourai-wallet-prosecution","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/05\/06\/sdnys-evidence-withholding-poses-challenges-to-samourai-wallet-prosecution\/","title":{"rendered":"SDNY’s Evidence Withholding Poses Challenges to Samourai Wallet Prosecution"},"content":{"rendered":"

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Earlier today, a letter submitted by the legal representatives of Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill uncovered that<\/a> the Southern District of New York (SDNY) had concealed exculpatory proof in the criminal matter.\u00a0<\/p>\n

As per the document, the prosecution had engaged with FinCEN prior to charging the developers regarding the feasibility of levying unlicensed money transmission allegations against a non-custodial entity.<\/p>\n

\u201cA mixer like Samourai that does not possess custody of the cryptocurrency by holding the private keys would strongly imply that Samourai is not functioning as an MSB,\u201d FinCEN informed the prosecutors, as noted in the filing.<\/p>\n

In private discussions, prosecutors expressed that they might pursue charges based on the \u201cfunctional control\u201d of the code, likely referencing Samourai\u2019s authority over the user interface and Samourai Wallet\u2019s coinjoin server. The prosecution acknowledged that such a premise \u201chas never been addressed in the guidance,\u201d conceding that \u201cit could be a challenging assertion to make.\u201d<\/p>\n

The correspondence between FinCEN and SDNY was disclosed following a so-called Brady request, mandating the government to provide any evidence that might absolve the developers of the charges.\u00a0<\/p>\n

The government is obligated to deliver exculpatory evidence to the defense no later than two weeks after lodging its indictment. The delayed revelation of such critically relevant documents has potentially misled the court, the letter contends, impacting both the bail stipulations imposed on the developers and the judge\u2019s tendency to refuse the motion to dismiss.<\/p>\n

The defense is presently pursuing a hearing to explore possible remedies for SDNY\u2019s actions, including the dismissal of charges.<\/p>\n

\u201cIt is difficult to envision a clearer instance of \u2018regulation by prosecution\u2019 than what we have here,\u201d the defense asserts, alluding to the recent Blache memo<\/a>. \u201cThe pertinent regulator conveyed to the prosecutors that Samourai Wallet was not a money transmitter \u2013 under the same public guidance that Mr. Rodriguez and Mr. Hill relied upon to direct their actions \u2013 yet the prosecutors proceeded to indict them for operating an unlicensed money services enterprise nonetheless.\u201d<\/p>\n

FinCEN\u2019s position on non-custodial service providers communicated to SDNY mirrors its 2019 guidance<\/a>, which stated that \u201ca cryptocurrency wallet provider is to be categorized as a money transmitter if \u201cthe host has total independent control over the value (though it is contractually bound to access the value solely on directives from the owner).\u201d<\/p>\n

Advocacy organizations and legal scholars have consistently posited<\/a> that the prosecution of Samourai Wallet developers, along with the prosecution of Tornado Cash developers Roman Storm and Roman Semenov, represents a blatant infringement of FinCEN guidance.<\/p>\n

While Samourai\u2019s Brady request succeeded, a similar request<\/a> made by Tornado Cash developer Roman Storm attempting to compel the Government to reveal \u201cany materials received from OFAC and FinCEN not already produced, including any substantial communications with those agencies\u201d was denied last year, as the Government contended that FinCEN is not part of the prosecution team on the case.<\/p>\n

As Storm highlights on X<\/a>, he was apprehended the same day Samourai Wallet prosecutors consulted FinCEN regarding the plausibility of unlicensed money transmission allegations, suggesting that SDNY has additionally been cognizant of the stretch of its charges throughout Storm\u2019s prosecution.<\/p>\n

\u201cFinCEN explicitly conveyed to SDNY prosecutors that Samourai Wallet\u2019s non-custodial structure did not necessitate money transmitter licensing, yet the DOJ indicted the developers regardless,\u201d Bitcoin Policy Institute\u2019s Head of Policy Zack Shapiro states to Bitcoin Magazine. \u201cThis prosecution exemplifies regulation through criminal indictment, directly contradicting Deputy AG Blanche\u2019s directive and undermining the Trump Administration\u2019s crypto policies.\u201d<\/p>\n

\u201cBrady violation,\u201d writes anti-money laundering specialist J.W. Verret on X. \u201cThe case ought to be dismissed on that basis alone, not to mention the new DOJ memo effectively instructing SDNY to cease the case.\u201d<\/p>\n

\u201cThe fact that prosecutors attempted to withhold this information from the defense constitutes a severe ethical breach and may ultimately lead to the case being dismissed,\u201d Verret informs Bitcoin Magazine. \u201cThat is, if the DOJ doesn\u2019t drop it altogether considering main justice has effectively ordered that such cases be abandoned.\u201d<\/p>\n

\u201cAs we\u2019ve articulated,\u201d writes CoinCenter\u2019s Peter van Valkenburgh on X, \u201cthe DOJ\u2019s unlicensed money transmission prosecutions directly contradict the rule of law. Today we received further confirmation that the prosecution recognized it was defying longstanding regulatory guidance yet pursued charges nonetheless.\u201d<\/p>\n

\u201cIt follows that if they were not money transmitters under FinCEN\u2019s guidance,\u201d the defense articulates in their letter, \u201cthen they could not possibly be prosecuted for lacking a license and for not enacting anti-money laundering measures,\u201d suggesting that the case against Samourai Wallet developers should be dismissed entirely.<\/p>\n

This is a guest post by L0la L33tz. The views expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.<\/em><\/p>\n<\/p><\/div>\n


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“`html Earlier today, a letter submitted by the legal representatives of Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill uncovered that the Southern District of New York (SDNY) had concealed exculpatory proof in the criminal matter.\u00a0 As per the document, the prosecution had engaged with FinCEN prior to charging the developers regarding the feasibility<\/p>\n","protected":false},"author":3,"featured_media":11789,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[2342],"class_list":["post-11788","post","type-post","status-publish","format-standard","has-post-thumbnail","category-bitcoin","tag-gptreturn-a-list-of-comma-separated-tags-from-this-title-sdny-withholding-of-evidence-undermines-charges-against-samourai-wallet-gpt"],"yoast_head":"\nSDNY's Evidence Withholding Poses Challenges to Samourai Wallet Prosecution - WSJ-Crypto<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/wsj-crypto.com\/index.php\/2025\/05\/06\/sdnys-evidence-withholding-poses-challenges-to-samourai-wallet-prosecution\/\" \/>\n<meta property=\"og:locale\" content=\"it_IT\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SDNY's Evidence Withholding Poses Challenges to Samourai Wallet Prosecution - 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