The co-founders of the Bitcoin privacy application, Samourai Wallet, have filed a motion to dismiss the criminal charges brought by the U.S. government, contending that the case contradicts years of policy set by the Treasury Department and could lead to the criminalization of open-source software. Keonne Rodriguez and William Hill, who are facing charges of operating an unlicensed money transmission business and conspiring to commit money laundering, have jointly requested that a federal judge in Manhattan dismiss the indictment.
Their lawyers assert that Samourai Wallet does not handle user funds and therefore should not be considered a financial institution or a money transmitter under federal law. The core issue revolves around the distinction between custodial services, which have control over customer assets, and non-custodial tools like Samourai, which use a method called CoinJoin to facilitate private blockchain transactions. According to the motion, users of Samourai Wallet have always maintained control over their cryptocurrency, with the app merely coordinating transactions among users to enhance privacy.
The defense references long-standing guidance from the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department, stating that providers of anonymizing software are not subject to the rules governing money transmitters. The filing states, 'FinCEN has consistently advised that companies and software applications that do not accept or transmit funds are not considered money transmitting businesses.' The defense team argues that the charges brought by the Department of Justice mark a significant departure from this interpretation, characterizing it as an 'apparent regulatory power struggle with FinCEN.' They liken the DOJ's actions to charging a manufacturer of shovels for potentially being used by murderers to bury victims, or a manufacturer of burner phones for potentially facilitating drug crimes.
The lawyers caution that the DOJ's theory could have far-reaching implications for developers of privacy tools. Several cryptocurrency advocacy groups, including Coin Center and the DeFi Education Fund, have expressed interest in filing amicus briefs in support of the motion, warning that the case could stifle innovation and infringe upon civil liberties if it is allowed to proceed. The court is scheduled to hear arguments on the matter on July 22.