Samourai Wallet Aims to Dismiss DOJ Charges Referencing FinCEN Guidelines

Overview

The co-founders of Samourai Wallet, a Bitcoin privacy application, are challenging the criminal allegations brought against them by the U.S. government. They claim that the accusations by the Department of Justice (DOJ) should be dismissed, as they contradict established Treasury Department policies and could jeopardize open-source software development.

Key Points

The defense argues that the allegations constitute a deviation from Treasury Department policy, potentially criminalizing open-source tools.
The main argument rests on the difference between custodial and non-custodial services. They assert that Samourai Wallet does not manage user funds and therefore shouldn’t qualify as a money transmitter.
According to their statement, the DOJ’s accusations break from prior guidance provided by the Financial Crimes Enforcement Network (FinCEN), which clarified that software helping to anonymize transactions is excluded from money transmitter regulations.

Further Details

The defense cites that Samourai Wallet users maintain control over their cryptocurrency. The application merely facilitates private transactions among users through a technique called CoinJoin. The document filed contends:

“FinCEN never maintained that it was a money transmitting business that must be licensed. To the contrary, FinCEN consistently advised that companies and software apps that did not ‘accept’ or ’transmit’ funds were not ‘money transmitting’ businesses.”

They argue that the DOJ’s actions are a significant and alarming departure from FinCEN’s stance, which they characterize as a regulatory conflict. They liken the DOJ’s approach to prosecuting businesses for tools that may be misused by others.

Implications

The lawyers have warned that the theory proposed by the DOJ could affect a wide array of developers of privacy-focused applications. Advocacy organizations within the cryptocurrency sector have shown interest in supporting the motion with amicus briefs, cautioning that these proceedings could stifle innovation and infringe upon civil liberties.

Next Steps

The court is set to address this matter on July 22.