Prosecutors in the Samourai Wallet case have refuted allegations that they withheld crucial evidence in their case against the crypto mixing service’s founders, Keonne Rodriguez and William Lonergan Hill.

Key Points:

• Prosecutors have denied suppressing evidence and urged the judge to dismiss the defense’s hearing request regarding Brady violations.
• The defense’s demand to dismiss the case due to the Blanche Memo is still pending.

In a letter to the court on Friday, prosecutors requested Judge Richard Berman of the Southern District of New York (SDNY) to reject Rodriguez and Hill’s motion seeking a hearing on the late disclosure of dialogue with the Financial Services Enforcement Network (FinCEN). This conversation, which occurred six months prior to the charges, indicated that Samourai Wallet did not qualify as a money transmitting business requiring a license.

Despite FinCEN’s advice, prosecutors proceeded to charge both individuals with one count each of conspiracy to launder money and operate an unlicensed money transmitting service, claiming that they laundered over $100 million in crime proceeds through Samourai Wallet, specifically targeting dark market participants, including hackers and fraudsters.

Rodriguez and Hill’s attorneys assert that the delayed communication constituted a Brady violation, referencing the 1963 Supreme Court case which mandates timely disclosure of exculpatory evidence to the defense.

Prosecutors dismissed these claims, arguing the disclosure timing was justified, stating that their discussion with FinCEN represented informal opinions, not formal regulatory findings. They reiterated that even if it was relevant, it was shared seven months before trial, making it unnecessary for the court to intervene.

In their own communication with the court, Samourai Wallet’s lawyers contended that the government’s failure to disclose had prejudiced their clients, potentially affecting the bail decision and early case dismissal motions.

prosecutors countered, asserting that their case was primarily based on allegations of money laundering, a more severe charge carrying up to 20 years in prison, rather than the licensing issue.

This debate surrounding the alleged Brady violation coincided with the defense’s call for prosecutors to halt the case under the Blanche Memo, which directed DOJ staff to focus on crypto enforcement priorities without punishing crypto exchanges or mixing services for user actions.

Since the defense’s request, meetings were held on April 10 to evaluate the situation. Nearly a month later, the government has yet to deliver a definitive response, which some former SDNY prosecutors have described as unusual.