FinCEN To SDNY: Samourai Wallet Did Not Need MSB License

"The Government recently disclosed that on August 23, 2023 – six months prior to the filing of charges in this case – senior representatives of the U.S. Treasury Department’s Financial Crime Enforcement Network (“FinCEN”), told prosecutors that under FinCEN’s guidance, the Samourai Wallet app would not qualify as a “Money Services Business” requiring a FinCEN license," reads a letter filed today on behalf of Samourai Wallet developers Keonne Rodriguez and William Hill.

"Shockingly," the defense continues, "six months later, the same prosecutors criminally charged Keonne Rodriguez and William Hill with operating just such a business without a FinCEN license."

"The prosecutors had discussed Samourai Wallet with senior officials at FinCEN on August 23, 2023 – six months before the return of the indictment, and nearly 20 months prior to the disclosure," the defense states.

The disclosure reveals that FinCEN let SDNY know that "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."

In an excerpt of an email, prosecutors additionally describe the unlicensed money transmission charges as "a difficult argument to make for us."

The defense states that prosecutors had "suppressed this information for over a year, disclosing it only on April 1, 2025, in response to a specific Brady request" – a legal procedure to produce information that is favorable to the defendant's case – noting that the court had issued orders "to disclose Brady material to the defense 'promptly after its existence becomes known to the Government so that the defense may make effective use of the information in the preparation of its case.'"

According to the letter, Brady material is meant to be disclosed no later than two weeks after the filing of the indictment. Instead, prosecutors appear to have withheld the evidence for over a year.

The defense is now seeking a hearing to determine an appropriate remedy for the late production of the exculpatory evidence, "including dismissal of charges."

"The fact that the regulator issuing licenses for money transmitting businesses did not believe Samourai Wallet needed one could well have impacted [...] the Magistrate Judge’s view of the strength of the Government’s case in making bail determinations that have confined Mr. Rodriguez to his home for nearly a year and cut both Defendants off from funds that could be used to mount their defense; and [...] this Court’s decision not to permit the Defendants to file a motion to dismiss immediately following their arraignments," the letter reads, highlighting the consequences of SDNY's late disclosure.

The defense concludes that "it is hard to imagine a clearer example of 'regulation by prosecution' than what we have here," referring to the recent 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."

If the unlicensed money transmission charges are inapplicable, so too are the charges on conspiracy to commit money laundering, as software projects are not liable to implement anti-money laundering controls under the Bank Secrecy Act.

With FinCEN under the same impression as Samourai Wallet developers themselves, namely that non-custodial service providers do not need MSB licenses, it seems most reasonable for the charges to be dismissed.

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