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SDNY Withholding Of Evidence Undermines Charges Against Samourai Wallet
This early morning, a letter submitted by the defense of Samourai Wallet designers Keonne Rodriguez and William Lonergan Hill exposed that the Southern District of New York (SDNY) had actually reduced exculpatory evidence in the criminal case.
According to the filing, the prosecution had actually sought advice from FinCEN prior to the indictment of the designers on the practicality of bringing unlicensed cash transmission charges against a non-custodial service.
“A mixer like Samourai that does not take custody of the cryptocurrency by possessing the private keys would strongly suggest that Samourai is not acting as an MSB,” FinCEN informed the district attorneys, according to the filing.
In internal interactions, district attorneys specified that they might bring charges based upon the “functional control” of the code, most likely describing Samourai’s control over the interface and Samourai Wallet’s coinjoin server. The prosecution specified that such an argument “has never been addressed in the guidance,” acknowledging that “it could be a difficult argument to make.”
The interactions in between FinCEN and SDNY were exposed following a so-called Brady demand, buying the federal government to turn over any evidence that might exonerate the designers of the charges.
The federal government is needed to hand exculpatory evidence over to the defense 2 weeks after submitting its indictment at the current. The late disclosure of such extremely pertinent products might now have actually misguided the court, the letter declares, impacting both the bail requirements put on the designers along with the judge’s disposition to reject the filing of a movement to dismiss.
The defense is now looking for a hearing to figure out prospective treatments to SDNY’s conduct, consisting of the termination of charges.
“It is hard to imagine a clearer example of ‘regulation by prosecution’ than what we have here,” the defense states, describing the current Blache memo. “The relevant regulator telling the prosecutors that Samourai Wallet was not a money transmitter – under the same public guidance that Mr. Rodriguez and Mr. Hill relied on to guide their conduct – and the prosecutors going ahead and indicting them for operating an unlicensed money services business anyway.”
FinCEN’s position on non-custodial company shown SDNY echoes its 2019 assistance, which specified that “a cryptocurrency wallet service provider is to be categorized as a cash transmitter if “the host has total independent control over the value (although it is contractually obligated to access the value only on instructions from the owner).”
Advocacy groups and legal scholars alike have long argued that the prosecution of Samourai Wallet designers, along with the prosecution of Tornado Cash designers Roman Storm and Roman Semenov, make up a clear offense of FinCEN assistance.
While Samourai’s Brady demand achieved success, a comparable demand made by Tornado Cash designer Roman Storm trying to oblige the Government to divulge “any materials received from OFAC and FinCEN not already produced, including any substantive communications with those agencies” was rejected in 2015, as the Government argued that FinCEN is not part of the prosecution group on the case.
As Storm mentions on X, he was jailed the exact same day Samourai Wallet district attorneys sought advice from FinCEN on the practicality of unlicensed cash transmission charges, making it look like however SDNY has actually in addition know the stretch of its charges for the totality of Storm’s prosecution.
“FinCEN explicitly informed SDNY prosecutors that Samourai Wallet’s non-custodial design did not require money transmitter licensing, yet the DOJ indicted the developers regardless,” Bitcoin Policy Institute’s Head of Policy Zack Shapiro informs Bitcoin Magazine. “This prosecution exemplifies regulation by criminal indictment, directly defying Deputy AG Blanche’s directive and undermining the Trump Administration’s crypto policies.”
“Brady violation,” composes anti-money laundering specialist J.W. Verret on X. “Case should be tossed on that alone, much less the new DOJ memo effectively ordering SDNY to drop the case.”
“The fact that prosecutors attempted to withhold this information from the defense is a serious ethical violation and may end up getting the case tossed,” Verret informs Bitcoin Magazine. “That is if the DOJ doesn’t drop it all together given that main justice has effectively ordered the cases like this be dropped.”
“As we’ve said,” composes CoinCenter’s Peter van Valkenburgh on X, “the DOJ’s unlicensed money transmission prosecutions are straight up counter to the rule of law. Today we got further confirmation that the prosecution understood it was contradicting long-standing regulatory guidance but brought charges anyway.”
“It follows that if they were not money transmitters under FinCEN’s guidance,” the defense states in their letter, “then they could not possibly be prosecuted for not having a license and not implementing anti- money laundering controls,” pointing that the case against Samourai Wallet designers must be tossed out completely.
This is a visitor post by L0la L33tz. Opinions revealed are totally their own and do not always show those of BTC Inc or Bitcoin Magazine.
This post SDNY Withholding Of Evidence Undermines Charges Against Samourai Wallet initially appeared on Bitcoin Magazine and is composed by L0La L33Tz.
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