Prosecutors Defend Evidence Disclosure in Samourai Wallet Case

According to Cointelegraph, U.S. federal prosecutors have countered allegations that they withheld evidence in the legal proceedings against the co-founders of the cryptocurrency mixing service, Samourai Wallet. The prosecutors assert that they disclosed a conversation with Treasury Department officials within the required timeframes. In a letter dated May 9 to a Manhattan federal court, the prosecutors opposed a request for a hearing, stating that they had provided all known substantive communications between themselves and the Treasury's Financial Crimes Enforcement Network (FinCEN) regarding Samourai well in advance of pretrial motions and the trial. They emphasized that the defendants would have seven months to utilize the information before the trial, arguing that no further action was necessary. On May 5, Samourai co-founders Keonne Rodriguez and William Hill requested a court hearing, claiming that prosecutors were tardy in disclosing that FinCEN representatives had informed them six months prior to charging the pair that, according to the agency's guidance, the service would not qualify as a 'Money Services Business' requiring a FinCEN license. Despite this, prosecutors charged the pair in February 2024 with conspiracy to operate an unlicensed money transmitting business and money laundering conspiracy, with the charges being unsealed and the pair arrested in April of that year. Both have pleaded not guilty. In their letter, prosecutors maintained that they acted in good faith by disclosing the contents of an informal conversation between themselves and Kevin O’Connor, the chief of FinCEN’s Virtual Assets and Emerging Technology Section, along with Policy Division staffer Lorena Valente. They argued that O’Connor and Valente’s comments were their individual, informal, and caveated opinions on whether Samourai would need to register as a money transmitter under FinCEN regulations. The prosecutors noted that an email summarizing an August 2023 call with FinCEN indicated that because Samourai does not take custody of the cryptocurrency, it would strongly suggest that Samourai is not acting as a money services business. However, they acknowledged that FinCEN staff did not have a definitive stance on what FinCEN would decide if the question were presented to their policy committee. Samourai’s legal team argued that the call demonstrated that Rodriguez and Hill were not money transmitters under FinCEN’s guidance and could not be prosecuted for not having a license. The co-founders sought to dismiss the case in April, citing a memo from Deputy Attorney General Todd Blanche released that month, which stated that the Justice Department would not prosecute crypto mixers for unwitting violations of regulations. Prosecutors addressed the memo in their letter, contending that the court should not consider it, as the memo explicitly states it may not be relied upon to create any right or benefit against the U.S. or its departments.