On Monday, Could 12, the protection within the Samourai Pockets case submitted a letter to the SDNY by which it made the case for the courtroom to schedule a listening to relating to the knowledge that got here to mild on April 1, 2025 about an August 23, 2023 name between the prosecution (“Authorities”) and FinCEN by which members of FinCEN said that they didn’t imagine that Samourai Pockets was a cash transmitting enterprise 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 by which 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 said that the prosecution did withhold proof that might 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 traditional 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 advised 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 Lawyer Basic Todd Blanche said that the U.S. Division of Justice will not goal digital forex mixing or tumbling providers.
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 realized 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 Discovered From FinCEN
The protection additionally famous that the Authorities minimized the significance of the knowledge 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 knowledge from the FinCEN members was their “particular person opinion” and that these FinCEN members’ interpretation of the regulation lacks any “authoritative impact.”
“That is sophistry,” wrote the protection about the way in which the Authorities downplayed the knowledge 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 equivalent 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 might be favorable to the defendants earlier than the onset of trial. Nevertheless (and importantly), it additionally said that the Authorities’s suppressing what it realized on its referred to as with FinCEN is problematic in that there’s “no purpose 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 knowledge from the FinCEN name got here to mild final month.
It additionally said that, throughout this year-long interval, the defendants “endured important 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 ultimate 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 clarify their actions, together with by disclosing inner correspondence about whether or not and when to reveal the knowledge,” wrote the protection, which additionally cited the circumstances by which 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 right treatment,” concluded the protection.