The U.S. federal prosecutors have defended their position against allegations of late evidence disclosure in the lawsuit involving the founders of cryptocurrency mixing service, Samourai Wallet. They insist that their revelation of a dialogue with staff from the Treasury Department was well within the stipulated timeframes.
In a letter submitted to a Manhattan federal court on May 9, the prosecutors objected to a demand for a hearing, maintaining that they provided “all significant interactions” between themselves and the Treasury’s Financial Crimes Enforcement Network (FinCEN) about Samourai “well before pretrial motions and trial.”
“The defendants will have ample time, seven months, to utilize the information before the trial,” they added. “No further action is required.”
On May 5, Samourai co-founders Keonne Rodriguez and William Hill sought a court hearing, alleging that prosecutors disclosed late that FinCEN representatives had informed them six months prior to their charges against the duo. They were informed that as per the agency’s guidance, the service “would not be classified as a ‘Money Services Business’ necessitating a FinCEN license.”
However, in February 2024, prosecutors proceeded to charge the co-founders with conspiracy to operate an unlicensed money transmitting business and money laundering conspiracy. These charges were unveiled, and the duo was arrested in April of the same year. Both have pleaded not guilty.
In their letter, prosecutors insisted that they “operated with integrity” in revealing the “details of this informal discussion” between them and Kevin O’Connor, the chief of FinCEN’s Virtual Assets and Emerging Technology Section in the Enforcement and Compliance Division, and Policy Division staff member Lorena Valente.
Prosecutors argued that O’Connor and Valente’s comments merely expressed “their personal, informal, and qualified opinion” on whether Samourai would need to register as a money transmitter under FinCEN regulations.
The prosecutors’ letter noted that an email from one of the prosecutors summarizing a call with FinCEN in August 2023 mentioned that since Samourai does not take custody of the cryptocurrency, it “implies strongly that Samourai is NOT considered an MSB [money services business].”
Yet, it was also mentioned that FinCEN staff “did not have a clear idea of what FinCEN would decide if this issue was taken to their FinCEN policy committee.”
Samourai’s lawyers argued that the call demonstrated Rodriguez and Hill “were not money transmitters under FinCEN’s guidance” and hence, “could not be prosecuted for not possessing a license.”
The Samourai co-founders attempted to dismiss the case in April, citing a memo from Deputy Attorney General Todd Blanche released that month which stated the Justice Department would not prosecute crypto mixers for “inadvertent violations of regulations.”
However, prosecutors countered this argument in their letter, stating the court “should not consider” the memo, as it asserts it “may not create any right or benefit” against the U.S. or its departments.
