Feds deny late disclosure of evidence in Samourai Wallet case

Federal prosecutors have countered claims of evidence suppression in the case against Samourai Wallet co-founders, Keonne Rodriguez and William Hill. Prosecutors assert that disclosure of communications with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) was timely, provided months before pretrial motions and the trial. They maintain that all known substantive communications were shared, giving the defendants ample time to utilize this information.

The dispute stems from a May 5th request by Rodriguez and Hill for a hearing, alleging late disclosure of a FinCEN conversation. Six months before the February 2024 charges, FinCEN representatives reportedly indicated that Samourai, based on their understanding, wouldn’t qualify as a Money Services Business (MSB) requiring a FinCEN license. Despite this, prosecutors charged Rodriguez and Hill with conspiracy to operate an unlicensed money transmitting business and money laundering conspiracy. Both have pleaded not guilty.

Prosecutors defend their actions, emphasizing the “informal” nature of the conversation with FinCEN’s Kevin O’Connor and Lorena Valente. They characterize the comments as individual opinions, not official FinCEN policy. While an email summarizing the August 2023 call suggested Samourai’s operations might not constitute an MSB due to its non-custodial nature, it also noted FinCEN lacked a definitive stance on the matter.

Samourai’s lawyers argued this conversation demonstrated their clients weren’t money transmitters and shouldn’t be prosecuted. They also cited Deputy Attorney General Todd Blanche’s April memo, suggesting the Justice Department wouldn’t prosecute crypto mixers for unwitting regulatory violations. However, prosecutors dismissed the memo’s relevance, citing its explicit statement prohibiting its use to create rights or benefits against the US government. The case continues, with the prosecution maintaining their disclosure complied with legal requirements. The defense contends that the withheld information is crucial to their case.