The ongoing legal battle surrounding the Samourai Wallet has drawn considerable attention as prosecutors adamantly refute claims that they have suppressed vital evidence in their criminal case against the co-founders, Keonne Rodriguez and William Lonergan Hill.
In a letter submitted to Judge Richard Berman of the Southern District of New York (SDNY) on Friday, the prosecution urged the court to dismiss Rodriguez and Hill’s recent request for a hearing that would address the government’s delayed disclosure regarding a conversation with the Financial Services Enforcement Network (FinCEN). This exchange, occurring six months prior to the formal charges, indicated that officials at FinCEN did not classify Samourai Wallet as a money transmitting business and, consequently, argued that it was not required to hold a license to operate.
Despite this guidance from FinCEN, prosecutors proceeded to charge both men with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. The prosecution contends that Rodriguez and Hill successfully laundered over $100 million in illicit proceeds and specifically targeted their offerings toward individuals operating within the “Dark/Gray Market,” including hackers and fraudsters.
The delay in communicating the FinCEN conversation to the defense has led Rodriguez and Hill’s legal representatives to claim that their due process rights have been infringed, citing a so-called Brady violation. This term is derived from the landmark Supreme Court decision in Brady v. Maryland (1963), which mandates that the government must disclose any exculpatory evidence to the defense in a timely manner.
Prosecutors, however, maintain that they have not committed any Brady violations. In their correspondence to the judge, they provided numerous justifications for the timing of their disclosure. They emphasized that their conversation with FinCEN personnel constituted informal opinions rather than a definitive regulatory ruling, arguing that opinions do not qualify as Brady material—only factual evidence does.
Furthermore, the prosecution clarified that they had provided the defense with this information seven months prior to trial, asserting that there was no requirement for court intervention as the defendants were given ample time to utilize the disclosed information effectively.
In a concurrent letter to the court, attorneys for Samourai Wallet articulated that their clients have suffered from the government’s lack of timely disclosure, suggesting it may have influenced critical decisions, including those regarding bail and motions to dismiss.
Nonetheless, prosecutors countered this point, arguing that the core of the case against Samourai Wallet is not primarily connected to the money transmitting charge, but is instead centered on the alleged money laundering scheme—an offense with a potential maximum sentence of 20 years.
The ongoing discussion regarding the possible Brady violation escalated further as the defense invoked the Blanche Memo, a recent directive from Deputy Attorney General Todd Blanche that instructs the U.S. Department of Justice to narrow its focus on crypto enforcement activities. This memo discourages litigation against crypto exchanges or mixing services for the actions of their end users.
After the defense formally requested that the case be dropped under the auspices of the Blanche Memo, prosecutors convened a meeting with the defense on April 10 to deliberate over the request. Almost a month later, however, the government has yet to deliver a definitive response, a situation described as unusual by some former SDNY prosecutors in conversations with CoinDesk.
This case continues to evolve, with implications for broader regulatory and enforcement strategies surrounding cryptocurrency. Observers are keenly watching how the judiciary and prosecution will navigate these complex legal and procedural waters as the trial approaches.
