Nikolas Sargeant
Federal prosecutors have firmly denied allegations of concealing crucial evidence in their ongoing case against Samourai Wallet's co-founders, maintaining they have fully satisfied all disclosure requirements.
In a May 9 filing with a Manhattan federal court, prosecution representatives stated they had provided defense attorneys with all "known substantive communications" with the Treasury Department's Financial Crimes Enforcement Network (FinCEN) regarding Samourai Wallet well in advance of trial proceedings. Prosecutors asserted the defense has possessed this information for months, concluding that "nothing more is warranted" and opposing the defendants' request for an evidentiary hearing.
Critical FinCEN Discussion Becomes Central to Defense Strategy
The legal dispute revolves around an August 2023 conversation between prosecutors and FinCEN officials—occurring six months before charges were filed.
Defense attorneys claim this discussion revealed that FinCEN staff believed Samourai likely wouldn't qualify as a Money Services Business (MSB) under existing regulatory frameworks, potentially eliminating the requirement for FinCEN registration.
Keonne Rodriguez and William Hill, arrested in April 2024, face charges of conspiracy to operate an unlicensed money-transmitting business and money laundering. Both have entered not guilty pleas and continue to assert their operations remained within legal boundaries.
Prosecutors countered by emphasizing they acted in good faith by disclosing details of the conversation with FinCEN's Kevin O'Connor and Lorena Valente. They stressed that the officials' remarks were informal personal opinions rather than definitive regulatory positions.
An internal email documenting the call noted that Samourai Wallet's non-custodial structure "would strongly suggest" it wasn't functioning as an MSB. However, prosecutors highlighted that FinCEN personnel "did not have a sense of what FinCEN would decide if this question were presented to their policy committee."
Transaction Volume Allegations Amid Shifting Regulatory Landscape
Prosecutors allege the defendants facilitated over $2 billion in illicit transactions, including $100 million in money-laundering operations connected to dark web marketplaces. Both defendants could face maximum sentences of 25 years, though recent Department of Justice policy changes regarding cryptocurrency enforcement might influence the case outcome.
The case unfolds against a backdrop of evolving crypto regulation in the United States. Recently appointed SEC Chairman Paul Atkins has already withdrawn or delayed several high-profile cases against cryptocurrency firms, signaling a potential shift in the regulatory environment that has been welcomed by digital asset industry participants.
Defense attorneys have leveraged the FinCEN conversation in their motion to dismiss, arguing it demonstrates Rodriguez and Hill weren't legally obligated to register as money transmitters. They also cited an April 2024 memo from Deputy Attorney General Todd Blanche indicating the Justice Department would not prosecute crypto mixing services for unintentional regulatory violations.
Prosecutors, however, dismissed the memo's relevance, stating it "may not be relied upon to create any right or benefit" and should not influence the court's decision in this matter.
