US federal prosecutors have responded with some sass, shutting down claims that they suppressed evidence in their case against the co-founders of the infamous crypto mixing service, Samourai Wallet. The prosecutors insist that they disclosed a crucial conversation with Treasury Department staff within the required timeframes.
In a May 9 letter to a Manhattan federal court, prosecutors pushed back against a request for a hearing, firmly stating they handed over “all known substantive communications” with the Treasury’s Financial Crimes Enforcement Network (FinCEN) long before the pretrial motions and trial, we're talking months ahead.
"The defendants will have seven months to use this info before the trial," the prosecutors wrote. "Honestly, what more do you want?"
A Tough Defense Against the Charges
Samourai co-founders Keonne Rodriguez and William Hill weren’t so happy with this timeline. On May 5, they asked the court for a hearing, arguing that prosecutors had dragged their feet when it came to disclosing an important piece of info: six months before charges were filed, FinCEN told them the service “wouldn’t qualify as a ‘Money Services Business’ requiring a FinCEN license.” So, why bother charging them, right?
But prosecutors weren’t having it. They charged the duo in February 2024 with conspiracy to operate an unlicensed money transmitting business and money laundering conspiracy, and arrested them in April. Both have pleaded not guilty.
In their letter, prosecutors made it clear that they “acted in good faith” and disclosed all the necessary details about the “informal chat” they had with Kevin O’Connor, the chief of FinCEN’s Virtual Assets and Emerging Technology Section, and staffer Lorena Valente. They pointed out that O’Connor and Valente were just offering their own "individual, informal, and caveated" opinion about whether Samourai needed to register as a money transmitter under FinCEN’s rules. Not exactly a solid “get out of jail free” card.
Prosecutors also noted that an email from one of them after the August 2023 call with FinCEN mentioned that because Samourai doesn’t handle crypto directly, “it would strongly suggest Samourai is NOT acting as an MSB (money services business).” However, the email also made it clear that FinCEN wasn’t even sure what they would decide if the issue went to their policy committee. So, who’s really in the dark here?
Samourai’s legal team argued that the call proved Rodriguez and Hill were totally in the clear under FinCEN's guidance and couldn't possibly be prosecuted for not having a license. They also tried to use Deputy Attorney General Todd Blanche’s April memo to get the case dismissed, claiming the Justice Department wouldn't pursue crypto mixers for “unwitting violations of regulations.”
But prosecutors weren’t about to let that slide. They hit back, saying the court “shouldn’t consider” Blanche's memo since it clearly states it “may not be relied upon to create any right or benefit” against the US or its departments.
Looks like Samourai’s legal team has a tough road ahead if they want to make their case stick!
HODL Team
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