Crypto Advocacy Groups Urge Dismissal of Case Against Bitcoin Mixer Samourai – Decrypt

Two crypto advocacy groups, whose amicus curiae briefs on behalf of Samourai Wallet were denied this week by a federal judge, told Decrypt that along with other organizations, they urge the dismissal of the case against the Bitcoin mixer charged with operating as an illegal money transmitter. 

The Blockchain Association, Coin Center, the DeFi Education Fund, and the Bitcoin Policy Institute argued in their respective briefs that Samourai Wallet has simply helped people execute financial transactions online without violating U.S. law. 

“Privacy is normal: it’s normal for people to want to be able to make financial transactions on-chain whilst still maintaining privacy—people do that with cash every day in their regular lives,” DeFi Education Fund Chief Legal Officer and Executive Director Amanda Tuminelli told Decrypt. 

Police in April 2024 arrested Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill and then shut down the website; the U.S. Department of Justice alleges that the app was an “unlicensed money transmitting business” used by criminals.

Samourai Wallet was a Bitcoin mixing service—a service allowing people to mask previous crypto transactions—that the feds shut down last year. 

The nonprofits spoke with Decrypt about their briefs and why they feel the case is important for the industry. 

The DeFi Education Fund, along with the Blockchain Association, argued that the money transmitting count was invalid because prosecuting software developers who don’t control user funds is outside the meaning of the statute.

In short: The defendants only wrote software, which other people used to transfer user funds—and never dealt with the money themselves. 

The advocacy groups maintain that the Financial Crimes Enforcement Network, or FinCEN, has determined that entities need “total independent control over the value” to be money transmitters. 

“[The government’s] interpretation of the money-transmitting laws to cover non-custodial software tools generated widespread shock and alarm in the cryptocurrency world, which had long relied on the government’s clear and correct guidance saying the opposite,” the brief by the Blockchain Association and the DeFi Education Fund read.

Coin Center’s executive director Peter Van Valkenburgh also told Decrypt that the defendants operating a coinjoin server “did not rise to the level of control over user funds that justifies treatment as a money transmitter, including under FinCEN’s own 2019 guidance.”

Lawyers for Rodriquez and Lonergan Hill last week submitted paperwork saying that the case should be dismissed, arguing that users of the app always had control over their Bitcoin.

Coin mixing apps have made headlines since U.S. authorities banned Americans from using the Ethereum-based Tornado Cash in 2022, saying that criminals had used that platform to launder dirty money. 

Feds then alleged that the app’s co-founders, Roman Storm and his colleague Roman Semenov, laundered more than $1 billion in criminal proceeds.

Politicians frequently spoke about the case, and America’s biggest crypto exchange, Coinbase, bankrolled a lawsuit arguing that the sanctioning of Tornado Cash was unjust.

The United States Treasury in March said it had delisted Tornado Cash from its list of parties sanctioned by the Office of Foreign Assets Control, and in April, a federal court permanently barred the body from reimposing sanctions on it. 

Edited by James Rubin