This morning, letters from Samourai wallet developer defense Keonne Rodriguez and William Lonergan Hill revealed that the Southern New York Region (SDNY) suppressed deprivation evidence in criminal cases.
According to the documents, the prosecutor sought Fincen before the developer sued to propose the feasibility of unlicensed currency transfer fees for non-custodial services.
“A blender like Samurai does not custody of cryptocurrencies by having a private key, which strongly implies Samurai is not an MSB,” Finnon told the prosecutor.
In internal communications, prosecutors said they could charge based on the code’s “functional control”, which could refer to Samori’s control over the user interface and Samourai Wallet’s Coinjoin Server. The prosecutor noted that such an argument “has never been resolved in guidance,” and he acknowledged that “it could be a difficult argument.”
Communications between Fincen and SDNY were revealed after the so-called Brady request, ordering the government to hand over any evidence that could lower the allegation of the developer.
Two weeks after the government’s latest prosecution, the deprivation evidence must be transferred to the defense. The letter said the late arrival of such highly relevant materials may have misled the court, affecting the bail requirement for developers and the judge’s tendency to refuse to file a motion to dismiss.
The defense is now seeking a hearing to identify potential remedies for SDNY’s conduct, including dismissing the charges.
The defense noted that “it’s hard to imagine a clearer ‘regulation’ than we have here.” “The relevant regulators told prosecutors that Samulai’s wallet is not a currency transmitter – under the same public guidance as Mr Rodriguez and Mr Hill rely on guiding their actions, the prosecutors continued to prosecute and prosecute them to operate an unlicensed currency service business.”
Fincen’s position on non-custodial service providers shares the 2019 guide with SDNY, which states: “If the host has full independent control over that value, the cryptocurrency wallet provider should be classified as a currency transmitter (although it only has the obligations of the contract, it is only under the owner’s instructions). ”
Advocacy groups and legal scholars have long believed that the prosecution of Samulai wallet developers, as well as the prosecution of tornado cash developers Rome Storm and Rome Seennov, constituted a clear violation of Fincen’s guidance.
Despite the success of Samourai’s Brady request, a similar request from tornado cash developer Roman Storm attempted to force the government to disclose that “any material received from OFAC and Fincen has not been produced yet, including any substantial communication with these agencies last year” because the government believes that Fincen is not part of the prosecution team in the case.
As noted on Storm on X, he was arrested on the same day, and Samulai Wallet Attorney consulted Fincen on the feasibility of unlicensed currency transfer fees, which made SDNY seem to be aware of the scope of its allegations throughout Storm’s prosecution.
Zack Shapiro, head of the Bitcoin Policy Institute, told Bitcoin Magazine, “Fincen clearly informed SDNY prosecutors that the non-custodial design of Samulai’s wallet does not require a currency transmitter license, but the Justice Department sued the developer.” “This lawsuit was made through a provision for criminal prosecution, which directly violated the deputy agent’s directive and undermined the Trump administration’s crypto policy.”
Anti-money laundering expert JW Verret wrote on X: “Brady’s illegal acts.”
“The fact that prosecutors attempt to withhold this information from the defense is a serious moral violation that could end up abandoning the case,” Verret told Bitcoin Magazine. “That is, if the primary justice effectively commands such a case, the Justice Department has not put it together.”
“As we said,” Concenter’s Peter van Valkenburgh wrote on X, “The Justice Department’s unlicensed currency transfer prosecution is totally against the rule of law. Today, we are further confirmed, and prosecutors know this contradicts long-term regulatory guidance, but brings allegations anyway.”
“So, if they were not currency transmitters under Fincen’s guidance, they would not be prosecuted for lack of permission without implementing anti-money laundering controls,” the defense stated in the letter, and the case against Samourai Wallet Developers should be completely abandoned.
This is a guest post from L0LA L33TZ. The opinions expressed are entirely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.
