On Monday, May 12, the defense in the Samourai Wallet case submitted a letter to the SDNY in which it made the case for the court to schedule a hearing regarding the information that came to light on April 1, 2025 about an August 23, 2023 call between the prosecution (“Government”) and FinCEN in which members of FinCEN stated that they didn’t believe that Samourai Wallet was a money transmitting business due to the noncustodial nature of the product.
The submission of this letter comes on the heels of a letter that the prosecution submitted to the court on Friday, May 9 in which it claimed that it didn’t violate the Brady rule (withhold exculpatory evidence).
Defense Claims Prosecution Did Suppress Key Evidence
In this recent letter, the defense stated that the prosecution did withhold evidence that could clear the Samourai developers of their alleged crime of conspiring to operate a money service business.
“The information the Government suppressed for almost a year is classic Brady: During its investigation of Samourai Wallet, prosecutors called FinCEN to determine whether it would qualify as a ‘money service business’ that was required to have a license and to implement anti-money laundering controls,” wrote the defense.
“Two FinCEN employees, including the Chief of FinCEN’s Virtual Assets and Emerging Technology Section in the Enforcement and Compliance Division, responded that, under FinCEN’s guidance, the answer was ‘no’ because Samourai did not take custody of a user’s cryptocurrency,” they added.
“Because this response precisely echoes the public statements Samourai Wallet made about why its business did not run afoul of the licensing and money laundering requirements for money transmitters, FinCEN’s statements provide powerful corroboration of Mr. Hill and Mr. Rodriguez’s [the defendants] good faith belief that they were not violating any laws.”
The defense went on to state that the prosecution brought the conspiracy to operate an unlicensed money transmitting business charge despite what the members of FinCEN had told them. It also argued that the prosecution has persisted with this charge despite the fact that two U.S. Senators have protested it in a letter and that a recent memo from U.S. Deputy Attorney General Todd Blanche stated that the U.S. Department of Justice will no longer target virtual currency mixing or tumbling services.
What is more, the defense highlighted that it is customary that evidence favorable to the defense be disclosed within two weeks of an indictment — whether the defense has requested it or not — and that two separate court orders under Rule 5(f) reiterated the need to disclose Brady information as soon as it is discovered.
The defense argued that both the Government’s year-long delay in disclosing what it learned on the August 23, 2023 call with FinCEN is enough to warrant the hearing on the matter it requested.
The Government Downplayed What It Learned From FinCEN
The defense also noted that the Government minimized the importance of the information that the members of FinCEN shared with it on the August 23, 2023 call.
It highlighted how the Government had referred to the call with FinCEN as “informal” and that the information from the FinCEN members was their “individual opinion” and that these FinCEN members’ interpretation of the law lacks any “authoritative effect.”
“This is sophistry,” wrote the defense about the way the Government downplayed the information it had received from FinCEN.
The defense added that it is important to consider that the two members of FinCEN expressed interpretations of FinCEN guidance that were identical to the interpretations that the defendants expressed in their public statements.
The Dangers Of Withholding Evidence
The defense acknowledged that the Brady rule only requires the disclosure of evidence that would be favorable to the defendants before the onset of trial. However (and importantly), it also stated that the Government’s suppressing what it learned on its called with FinCEN is problematic in that there is “no reason to believe that prosecution would have not have accepted a guilty plea” in regard to the conspiracy to operate an unlicensed money transmitting business charge between when it first indicted the Samourai Wallet developers over a year ago and when the information from the FinCEN call came to light last month.
It also stated that, during this year-long period, the defendants “endured significant restrictions on their liberty and spent a substantial portion of their savings to defend themselves,” in part as a result of the Government’s withholding information.
Precedent For A Hearing
In the final portion of the letter, the defense noted that there is precedent for the type of hearing that it’s requesting.
“When confronted with belated disclosures of Brady information, courts in this district have not hesitated to require prosecutors to explain their actions, including by disclosing internal correspondence about whether and when to disclose the information,” wrote the defense, which also cited the cases in which this precedent was established.
“Before the Government has refused to disclose this information to the defense, the Court should compel it to do so, and then hold a hearing to determine the circumstances of the Government’s late disclosure of Brady information and the proper remedy,” concluded the defense.
