Prosecutors face backlash for suppressing evidence in Samourai Wallet case
On May 5, 2025, it was revealed that the DOJ was well-informed that the crypto mixer Samourai Wallet didn’t fit the definition of a money transmitter. However, it didn’t stop the prosecution: Samourai co-founders were arrested anyway. A year later, the case may be dropped by the SEC.
Table of ContentsNew details of the caseWhy is Samourai Wallet not acting as a Money Service Business?The backstoryA broader look
New details of the case
A team of lawyers working for Samourai Wallet made available a letter they sent to the Manhattan federal court on May 5, 2025. The letter reveals that in 2023, the Financial Crime Enforcement Network senior officials informed the Department of Justice that under FinCEN guidance, the crypto mixer Samourai Wallet app doesn’t qualify as a “Money Service Business.†It meant that the app could work without the FinCEN license.Â
Six months after receiving this notification, prosecutors who got this message criminally charged Samourai Wallet co-founders Keonne Rodriguez and William Lonnergan Hill for operating a money-transmitting service without a license from FinCEN.Â
Just revealed: FinCEN explicitly told prosecutors Samourai Wallet wasn't a money transmitter due to its non-custodial design; DOJ prosecuted developers anyway, suppressing exculpatory evidence for a year. pic.twitter.com/nxyDrXQGr8— Zack Shapiro (@zackbshapiro) May 5, 2025
According to the letter, prosecutors were covering the fact that they were well aware that Samourai Wallet was not qualified as a money transmitter, prosecuting the service without lawful grounds. The truth was revealed only after a specific request on Apr. 1, 2025. The DOJ didn’t provide the reasoning behind withholding evidence that the department had been advised not to prosecute the co-founders of Samourai Wallet.
In the letter, the lawyers quote Deputy Attorney General Todd Blanche’s memorandum introduced on Apr. 7. The memo is called “Ending Regulation by Prosecution.†It aims at terminating such practices. The quote goes:
“[t]he Justice Department will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets, while President Trump’s actual regulators do this work outside the punitive criminal justice framework.â€
More than that, the memo especially notes that the DOJ will no longer prosecute mixing services for acting without a FinCEN license. Withholding the info about the FinCEN’s consultation with the DOJ for nearly a year was a violation on the Justice Department’s side. Although the Blanche Memo must serve as a solid ground for dismissing the charges against Samourai Wallet, the case is yet to be closed.Â
On May 6, the Judge ordered prosecutors to respond to the letter.
Update: Judge Berman just ordered SDNY to respond to the defense's Brady letter by noon on Friday. https://t.co/GRMivAqC9u— Zack Shapiro (@zackbshapiro) May 6, 2025
Read more:US prosecutors seek more time to decide on dropping Samourai Wallet charges
Why is Samourai Wallet not acting as a Money Service Business?
Samourai was a non-custodial, open-source platform, meaning that it didn’t deal with users’ money; it only provided them with a tool to obfuscate the transaction data. It never had to hold users’ funds at any stage of the operation. The mixer platform’s staff didn’t benefit from the Samourai Wallet operation.
Samourai Wallet lawyers explain why the mixing platform doesn’t qualify as a Money Service Business:
“The controversy stems from the fact that FinCEN, the principal regulator in this space, had previously issued guidance indicating that the type of non-custodial software that powered the Defendants’ business would not be considered a “money services business†that required a license and procedures designed to detect and prevent money laundering.â€
The FinCEN guidance focuses on custody as a factor determining whether the platform can be qualified as an MSB or not. Therefore, Samourai Wallet, as a platform that does not have custody over users’ crypto, does not act as an MSB.
The letter contains two quotes from Rodriguez’s speeches given before the prosecution started. The things he said indicate that he has been firmly assured that Samourai Wallet doesn’t break the law, based on the very same logic: non-custody platforms don’t need licenses and AML tools.
The backstory
Samourai Wallet is a crypto mixer app, meaning it obfuscates the transaction data to facilitate private transactions of crypto. The app is non-custodial, and it was guaranteed that the co-founders of the app would not be prosecuted in the U.S.
However, in April 2024, the co-founders of Samourai Wallet, Rodriguez and Hill, were charged as operators of an unlicensed money-transmitting business with a $2 billion volume in transactions. Also, they were accused of laundering $100 million in illicit proceeds. According to the press release, the platform was used to launder money associated with the Hydra and Silk Road marketplaces.
FBI Assistant Director in Charge James Smith claimed that Rodriguez and Hill knowingly operated an unlawful service for ten years. IRS-CI Special Agent in Charge Thomas Fattorusso stressed that the Samourai Wallet co-founders didn’t care about existing regulations. The latter claim goes against Rodriguez’s statements that if operating a non-custodial crypto mixer was against the law in the U.S., the platform would move jurisdiction.
Day 377 since the Samourai Wallet developers were indicted, raided, & arrested.Non-custodial wallets are not money transmitters. CoinJoins are not money laundering. Drop the charges. Stop the lawfare.Details: https://t.co/HKylWyPCWUSupport: https://t.co/vFHTUX9cVi pic.twitter.com/kMRKMvwOMV— burn the bridge (@econoalchemist) May 6, 2025
Both Rodriguez and Hill were arrested and charged in 2024. They face up to 25 years behind bars.
A broader look
Now, it has become obvious that during the Biden term as the POTUS, the U.S. officials were participating in a stealth crackdown on cryptocurrency.Â
Aside from the war on crypto mixers, the era was marked by a policy colloquially known as Operation Choke Point 2.0 or the debanking of the crypto business. In short, U.S. officials recommended that banks stop providing services to clients using cryptocurrency. Usually, without explaining the reasons. Currently, the OCP is criticized and fought against by such established people as Sen. Cynthia Lummis and Coinbase CTO Paul Grewal. The Federal Reserve’s chair, Jerome Powell, expressed concerns with debanking, too.Â
In both the Tornado Cash and Samurai cases, DOJ adopted AML positions that conflicted with FinCEN’s guidance on who actually has AML obligations. This is no way to provide fair notice. https://t.co/GfoxkvG6bH— paulgrewal.eth (@iampaulgrewal) May 5, 2025
Samourai Wallet’s case is similar to the case of another crypto mixer, Tornado Cash. The latter platform is fighting to terminate prosecution as well. Considering the pro-crypto and privacy-friendly direction of the Trump Administration 2.0, there is hope that the founders of crypto mixers will be acquitted, while people responsible for suppressing crypto and debanking crypto businesses will be held accountable.
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2025-05-07 20:53:29
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