Samourai Wallet Fires Back: US Gov’t Accused of Burying Legal Justification for Crackdown
Privacy-focused Bitcoin wallet Samourai drops bombshell allegation—claims feds hid internal legal opinions that might undermine their case. Another day, another ’regulation-by-enforcement’ power play from the suits in DC.
Who needs due process when you’ve got a budget to burn and a banking cartel to appease?
FinCEN said no license was required
The defendants believe the prosecutors filed criminal charges six months later, omitting FinCEN’s legal interpretation from the initial disclosure.
“The non-disclosure prejudiced our clients’ ability to seek bail, prepare their defense, and pursue early dismissal of the case,” the filing stated.
The defendants have requested a formal hearing to investigate what they call a “Brady violation,” referring to the constitutional requirement that prosecutors must disclose evidence favorable to the defense.
In their May 5 submission, lawyers for the defendants insisted the suppression of evidence wasn’t trivial. They cited FinCEN’s interpretation as aligned with Samourai’s sentiment, that the company’s non-custodial wallet software did not qualify as a regulated money transmitter under US law.
Rodriguez and Hill pleaded their innocence pre-arrest
Samourai’s co-founders had previously addressed regulatory concerns in public forums years before their indictment. On July 12, 2021, Rodriguez stated on a podcast that CoinJoin, a technique used by Samourai to anonymize transactions, was legal and not subject to transmission laws unless custody of funds was involved.
“Users are entirely entitled to use this type of tool. It’s just a collaborative transaction. It gets iffy if you’re providing CoinJoin services, and you’re taking custody, then you’re a money transmitter and you better have a money transmission license,” he surmised.
He reiterated this position on January 30, 2022, claiming that FinCEN and other regulators had consistently said non-custodial wallet developers were not subject to MSB licensing.
“We aren’t transmitting money,” Rodriguez said at the time, a legal opinion later FinCEN staff also mentioned in their internal discussions.
The defense team contends that if FinCEN was of the opinion that Samourai was outside the scope of its regulatory purview, then the prosecution lacked grounds to pursue criminal charges. “It is hard to imagine a clearer example of ‘regulation by prosecution,’” the letter continued.
On April 30, the defense demanded that the government produce documentation explaining why the FinCEN call had not been disclosed earlier. Two days later, on May 2, the government provided some emails from August 2023 but refused to share internal deliberations discussing the delay.
Prosecutors have not yet offered an explanation for the year-long suppression, and this has led Rodriguez and Hill to request a court hearing to determine the circumstances behind the delayed disclosure.
DOJ legal contradiction after policy changes
On April 7, Deputy Attorney General Todd Blanche issued a memorandum titled “Ending Regulation by Prosecution.” The memo directed prosecutors to avoid using criminal charges to impose regulatory frameworks on digital asset businesses, especially “tumbling and mixing services,” like those operated by Samourai Wallet.
In its original indictment, the Department of Justice alleged that Samourai facilitated over $2 billion in crypto transactions through its mixing service, with more than $100 million tied to criminal activity from darknet marketplaces and online scams. Rodriguez and Hill pleaded not guilty to all charges.
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