DOJ Under Scrutiny for Allegedly Concealing FinCEN Guidance Regarding Samourai Wallet
Playing the Legal Chess Game: Has Samourai Wallet's Case Just Turned?
The dicey situation surrounding privacy-focused crypto platform Samourai Wallet has taken an intriguing turn. Lawyers for its co-founders, Keonne Rodriguez and William Hill, have raised eyebrows, claiming federal prosecutors deceptively withheld crucial guidance from the U.S. Treasury that could have exonerated them early on.
In a bold move, Samourai's legal team fired off a blunt letter to a Manhattan federal court on May 5, accusing prosecutors of hiding a pivotal conversation with the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN)—six months before charges were unveiled.
The incriminating document was submitted to the court, painting a picture of secretive proceedings.
According to Samourai's legal team, FinCEN officials informed prosecutors that Samourai Wallet's app did not fit the description of a "Money Services Business" (MSB) under their existing guidance. If this had been shared, it would have cleared the platform of any licensing wrongdoings.
"It is shocking that six months later, the same prosecutors criminally charged Keonne Rodriguez and William Hill with operating an unlicensed MSB," the lawyers argued.
Prosecutors on the hot seat for disclosure deadlines
The lawyers put forward that prosecutors were legally obliged to disclose their conversations with FinCEN by May 8, 2024, just two weeks after charges were publicly announced. However, the disclosure only transpired a year later, on April 1, 2025, far after the deadline.
This considerable gap could very well be the game-changer the defense needed. The charges against Rodriguez and Hill first surfaced in early 2024, when federal authorities accused them of conspiracy to operate an unlicensed money transmitting business and money laundering conspiracy. The duo was arrested in April 2024 and have since pleaded not guilty.
The core of Samourai Wallet's service lies in its ability to anonymize cryptocurrency transactions by blending funds from multiple wallets, making transactions nearly impossible to trace. The government maintains that this anonymization service enabled over $2 billion in illicit activities, including more than $100 million tied to black markets and fraudulent schemes.
FinCEN's internal assessment: Samourai didn't take custody
At the heart of the defense's argument lies an internal email from a prosecutor that provides a summary of the FinCEN conversation. This email reveals that Kevin O'Connor, head of FinCEN's Virtual Assets and Emerging Technology section, and Lorena Valente from the Policy Division stated Samourai's lack of control over users' cryptocurrency suggests it was not an MSB.
"Because Samourai does not possess the private keys to users' crypto addresses, it strongly suggests the company is NOT acting as an MSB," the email outlined.
While FinCEN admitted prosecutors could argue that Samourai “functionally controlled” funds, the officials concluded that this argument would be weak, as no formal guidance addresses such cases.
A renewed push for dismissal
With the FinCEN emails on their side, Rodriguez and Hill's legal team are prepping to resubmit their motion to dismiss the charges, positing that the pair lacked fair warning that their actions were illegal.
They've also requested a hearing to explore why this FinCEN communication was suppressed and to consider repercussions or other remedies.
This latest court filing comes just days after the Justice Department hinted at revising its crypto enforcement approach, with Deputy Attorney General Todd Blanche announcing in an April 7 memo that the DOJ would no longer pursue crypto mixer cases based on imprecise regulations.
Both the prosecution and defense have requested additional time on April 28 to weigh the consequences of this new approach. Regardless, the defense has made it clear: if charges proceed, they're prepared to put up a spirited fight.
"If Samourai was not an MSB under FinCEN's guidance," the lawyers stated, "then they could not possibly be prosecuted for lacking a license."
The judge will soon decide whether to grant the hearing and enable the defense to pursue dismissal. This stance is being closely watched across the crypto industry, particularly by developers of privacy tools—many of whom fear unclear regulations are being used to criminalize technology.
In a fascinating twist, it appears Samourai's defense may now rest on the government's own experts' belief that they did not break the law.
Also Read: Ripple CTO Explains Why SEC Ended XRP Lawsuit After 4 Years
Background:
- Samourai Wallet co-founders Keonne Rodriguez and William Hill face charges of operating an unlicensed money transmitter and money laundering conspiracy, accusations they've denied.
- The defense claims prosecutors kept crucial guidance from the U.S. Treasury about Samourai Wallet's status as a Money Services Business (MSB) a secret, compromising the prosecution's central claim.
- The defense asserts that this suppressed guidance states FinCEN deemed Samourai Wallet's non-custodial mixing function as outside MSB regulations.
- Prosecutors were obligated to disclose the FinCEN conversation by May 8, 2024, just two weeks after charges were disclosed, but didn't do so until April 1, 2025—more than a year overdue.
- The Justice Department recently signaled a shift in crypto enforcement with Deputy Attorney General Todd Blanche's April 7 memo suggesting the DOJ will not pursue crypto mixer cases based on fuzzy regulations.
- The defense has renewed their push for dismissal of charges, challenging the legitimacy of the money transmitter charge while keeping money laundering allegations pending.
- The case is being closely watched in the crypto industry due to concerns about the use of unclear regulations to criminalize privacy technology.
- The lawyers for Samourai Wallet co-founders argue that federal prosecutors allegedly withheld crucial guidance from the U.S. Treasury that could have potentially exonerated them, suggesting a deceptive practice.
- The defense team accuses the prosecutors of failing to disclose conversations with the Financial Crimes Enforcement Network (FinCEN) by the mandatory deadline, a delay that could significantly impact the case.
- The incriminating document reveals FinCEN officials opined that Samourai Wallet's app did not meet the criteria for a "Money Services Business" (MSB) under their existing guidance, thus potentially clearing the platform of any licensing wrongdoings.
- The lawyers are now preparing to resubmit their motion to dismiss the charges, contending that the lack of fair warning about the illegality of their actions necessitates a hearing to reevaluate the case.
- The defense is confident in their argument that if Samourai was not an MSB under FinCEN’s guidance, they could not be prosecuted for lacking a license, a stance that has garnered attention across the crypto industry, particularly from developers of privacy tools wary of unclear regulations potentially criminalizing technology.
