Samourai Wallet Responds To SDNY's Moot Request

The Southern District of New York (SDNY) has claimed that it did not fail to disclose Brady material to the defense following revelations that the prosecutor's office had been informed by FinCEN that Samourai Wallet likely did not need to register as a money service business prior to bringing its indictment of the developers.

According to SDNY, the court should moot the defense's request for a hearing to remedy SDNY's actions as the material revealed was merely the informal opinion of senior FinCEN staff, who did not act on behalf of the agency – thereby not constituting Brady material.

"The information the Government suppressed for almost a year is classic Brady," argues the Samourai Wallet defense in its latest filing to support its hearing request.

FinCEN's response to SDNY "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," the defense writes, providing "powerful corroboration of Mr. Hill and Mr. Rodriguez’s good faith belief that they were not violating any laws."

"Prosecutors produced many terabytes of discovery, carefully avoiding disclosure of what they had to know would be a bombshell," the defense continues, describing SDNY's conduct as "proof of the very 'regulation by prosecution' that two U.S. Senators protested at the time of the charges, that the cryptocurrency industry has decried in letters to Congress and the President, and that is now the subject of the Blanche Memo."

Debunking SDNY's claims that the opinions expressed by FinCEN were merely informal opinions of senior FinCEN employees, the defense states that "the fact that they expressed the identical interpretation of the FinCEN guidance as the Defendants did in their public statements while they were supposedly knowingly engaged in a criminal conspiracy."

"That FinCEN employees—including the one responsible for enforcing FinCEN rules against companies like Samourai Wallet—had the same “opinion” as Mr. Hill and Mr. Rodriguez is evidence that they reasonably believed that they did not require a FinCEN license or anti-money laundering controls," the defense concludes.

Noting that SDNY refers to money service business registration requirements as "ambiguous statutes" to argue that prosecutors are not required to follow FinCEN's interpretation of the law according to the overturning of Chevron, the defense notes that prosecutors are not allowed to criminally prosecute individuals for violations of "ambiguous statutes."

"[A]mbiguity concerning the ambit of criminal statutes should be resolved in favor of lenity," the defense cites, highlighting that violations of ambiguous criminal law must be interpreted in favor of the defendants.

"For this reason," the defense argues, "the Government’s continued failure to dismiss this prosecution under the Blanche Memo only delays what should be inevitable—the dismissal of the charges as a matter of law."

The court should set a hearing to discuss the appropriate remedies, and not dismiss the defense's request as moot.

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