On Monday, Could 12, the protection within the Samourai Wallet case submitted a letter to the SDNY wherein it made the case for the courtroom to schedule a listening to concerning the data that got here to gentle on April 1, 2025 about an August 23, 2023 name between the prosecution (“Authorities”) and FinCEN wherein members of FinCEN acknowledged that they didn’t believe that Samourai Wallet was a money transmitting business as a result of noncustodial nature of the product.
The submission of this letter comes on the heels of a letter that the prosecution submitted to the courtroom on Friday, Could 9 wherein it claimed that it didn’t violate the Brady rule (withhold exculpatory proof).
Protection Claims Prosecution Did Suppress Key Proof
On this latest letter, the protection acknowledged that the prosecution did withhold proof that would clear the Samourai builders of their alleged crime of conspiring to function a cash service enterprise.
“The knowledge the Authorities suppressed for nearly a 12 months is basic Brady: Throughout its investigation of Samourai Pockets, prosecutors referred to as FinCEN to find out whether or not it might qualify as a ‘cash service enterprise’ that was required to have a license and to implement anti-money laundering controls,” wrote the protection.
“Two FinCEN staff, together with the Chief of FinCEN’s Digital Property and Rising Know-how Part within the Enforcement and Compliance Division, responded that, beneath FinCEN’s steering, the reply was ‘no’ as a result of Samourai didn’t take custody of a person’s cryptocurrency,” they added.
“As a result of this response exactly echoes the general public statements Samourai Pockets made about why its enterprise didn’t run afoul of the licensing and cash laundering necessities for cash transmitters, FinCEN’s statements present highly effective corroboration of Mr. Hill and Mr. Rodriguez’s [the defendants] good religion perception that they weren’t violating any legal guidelines.”
The protection went on to state that the prosecution introduced the conspiracy to function an unlicensed cash transmitting enterprise cost regardless of what the members of FinCEN had informed them. It additionally argued that the prosecution has endured with this cost even if two U.S. Senators have protested it in a letter and {that a} latest memo from U.S. Deputy Legal professional Basic Todd Blanche acknowledged that the U.S. Division of Justice will not goal digital foreign money mixing or tumbling companies.
What’s extra, the protection highlighted that it’s customary that proof favorable to the protection be disclosed inside two weeks of an indictment — whether or not the protection has requested it or not — and that two separate courtroom orders beneath Rule 5(f) reiterated the necessity to disclose Brady info as quickly as it’s found.
The protection argued that each the Authorities’s year-long delay in disclosing what it discovered on the August 23, 2023 name with FinCEN is sufficient to warrant the listening to on the matter it requested.
The Authorities Downplayed What It Realized From FinCEN
The protection additionally famous that the Authorities minimized the significance of the data that the members of FinCEN shared with it on the August 23, 2023 name.
It highlighted how the Authorities had referred to the decision with FinCEN as “casual” and that the data from the FinCEN members was their “particular person opinion” and that these FinCEN members’ interpretation of the legislation lacks any “authoritative impact.”
“That is sophistry,” wrote the protection about the best way the Authorities downplayed the data it had obtained from FinCEN.
The protection added that it is very important contemplate that the 2 members of FinCEN expressed interpretations of FinCEN steering that had been an identical to the interpretations that the defendants expressed of their public statements.
The Risks Of Withholding Proof
The protection acknowledged that the Brady rule solely requires the disclosure of proof that will be favorable to the defendants earlier than the onset of trial. Nevertheless (and importantly), it additionally acknowledged that the Authorities’s suppressing what it discovered on its referred to as with FinCEN is problematic in that there’s “no motive to imagine that prosecution would haven’t have accepted a responsible plea” in regard to the conspiracy to function an unlicensed cash transmitting enterprise cost between when it first indicted the Samourai Pockets builders over a 12 months in the past and when the data from the FinCEN name got here to gentle final month.
It additionally acknowledged that, throughout this year-long interval, the defendants “endured vital restrictions on their liberty and spent a considerable portion of their financial savings to defend themselves,” partly on account of the Authorities’s withholding info.
Precedent For A Listening to
Within the closing portion of the letter, the protection famous that there’s precedent for the kind of listening to that it’s requesting.
“When confronted with belated disclosures of Brady info, courts on this district haven’t hesitated to require prosecutors to elucidate their actions, together with by disclosing inner correspondence about whether or not and when to reveal the data,” wrote the protection, which additionally cited the circumstances wherein this precedent was established.
“Earlier than the Authorities has refused to reveal this info to the protection, the Court docket ought to compel it to take action, after which maintain a listening to to find out the circumstances of the Authorities’s late disclosure of Brady info and the correct treatment,” concluded the protection.
