Federal prosecutors have rejected accusations that they withheld key evidence in their case against the co-founders of Samourai Wallet, a crypto mixing service, asserting they complied with all disclosure obligations.
In a letter filed on May 9 with a Manhattan federal court, the prosecution argued that it had disclosed all “known substantive communications” with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) concerning Samourai Wallet well ahead of trial proceedings.
Prosecutors claimed the defense has had the information for months and that “nothing more is warranted,” opposing the defendants’ request for a hearing.
Samourai Wallet Case Hinges on 2023 FinCEN Call
The dispute centers on a conversation between prosecutors and FinCEN staff that took place in August 2023—six months before charges were filed.
According to the defense, FinCEN officials had indicated in that discussion that Samourai likely would not be classified as a Money Services Business (MSB) under current regulations, potentially negating the requirement for a FinCEN license.
Samourai Wallet co-founders Keonne Rodriguez and William Hill, who were arrested in April 2024, were charged with conspiracy to operate an unlicensed money-transmitting business and money laundering.
Both have pleaded not guilty and maintain they operated within legal boundaries.
In response, prosecutors stated they acted in good faith by sharing details of the call, which involved FinCEN’s Kevin O’Connor and Lorena Valente.
They emphasized that the officials’ comments were informal and reflected personal opinions—not definitive regulatory positions.
An internal email summarizing the call noted that Samourai Wallet’s lack of custody over user funds “would strongly suggest” it was not operating as an MSB.
However, prosecutors highlighted that FinCEN staff “did not have a sense of what FinCEN would decide if this question were presented to their policy committee.”
Defense attorneys have used the FinCEN conversation as part of their argument to dismiss the case.
They claim it shows Rodriguez and Hill were not legally required to register as money transmitters.
They also referenced an April 2024 memo from Deputy Attorney General Todd Blanche, stating that the Justice Department would not prosecute crypto mixers for unintentional regulatory breaches.
But prosecutors dismissed the memo’s relevance, writing that it “may not be relied upon to create any right or benefit” and should not influence the court’s decision on the case.
Samourai Cofounders Facilitated Over $2B in Illicit Transactions
U.S. prosecutors alleged that the duo facilitated over $2 billion in illicit transactions, including $100 million in money-laundering transactions tied to dark web markets.
Both Hill and Rodriguez could face up to 25 years behind bars for the crimes, though the DOJ’s recent shift in crypto policy may alter their fate.
The legal battle surrounding Samaourai cofounders comes amid an improving regulatory environment in the US.
As reported, Paul Atkins has been sworn in as Chairman of the SEC, marking a leadership shift that is being welcomed by the digital asset industry.
Under Atkins’ leadership, the SEC has already withdrawn or delayed several prominent cases against crypto firms.
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