Today, Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill appeared together for a status conference in state court in the Southern District of New York.
I attended the status conference for the #Samurai case today on behalf of @BitcoinMagazine.
This is the current status: photo.twitter.com/MGVlV6LnJK
— Frank Corva (@frankcorva) September 17, 2024
This marked the first time the two had appeared together in public since the US Department of Justice (DoJ) the two developers charged with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmission business in April 2024. It was also the first time any of them had appeared in court since Hill appeared before his release on bail in July And Rodriguez first attended a court hearing in May.
The Public Prosecution Service was the first to address the court, stating that it had produced “large amounts of evidence.”
The first batch was made available to the defense in mid-June 2024. This batch included company data, emails and information about social media accounts.
The second batch, made available to the defense in mid-August 2024, contained data extractions from the devices the DoJ seized from the two developers. The DoJ extracted information from 15 of the 44 devices seized from Rodriguez and 25 of the 27 devices seized from Hill.
The prosecution also stated that it would soon produce a third set of evidence containing a “relatively modest” amount of data and that it was prepared to proceed with the trial.
No proof of money transfer
Rodriguez’s attorney argued that it was too early to set a trial date since the defense has not yet reviewed all of the findings, which were made available in mid-August 2024. The defense also said it has not yet encountered evidence showing that Rodriguez or Hill operated an unlicensed money transmission business.
Hill’s attorney stated that they received 8 terabytes of discovery. To put this amount of data into context, he explained that this was equal to 75% of the amount of information in the Library of Congress and that if you printed this information out, you could stack the paper it was printed on “22 times to the moon and back,” indicating that it would be difficult to sort and review.
Hill’s attorney also referred to the letter from Senators Cynthia Lummis (R) and Ron Wyden (D) in which the lawmakers stated that the U.S. Treasury Department’s unprecedented interpretation of the Financial Crimes Enforcement Network (FinCEN) statute regarding the DOJ’s operation of an unlicensed money transmission business is inconsistent with the intent of the rule. For this reason, he moved a motion to dismiss the complaint.
The judge denied this request and scheduled a follow-up hearing for December 17, 2024 at 10:00 a.m. (Eastern Time).
Rodriguez’s request for bail changes
In the second part of the conference, Rodriguez’s attorney requested two modifications to Rodriguez’s bail conditions. He asked the court to remove Rodriguez’s house arrest order and to modify restrictions on Rodriguez’s ability to trade cryptocurrency, some of which was proceeds from Samourai. (Zack Shapiro, Legal Fellow at the Bitcoin Policy Institute (BPI) (later explained to me that the second amendment was requested in part so Rodriguez could use Samourai’s bitcoin proceeds to pay legal fees.)
Rodriguez’s attorney argued that house arrest was “unduly restrictive” and “unnecessary,” and that Rodriguez does not pose a flight risk. The defense also cited two instances in which Rodriguez had the opportunity to flee but did not, in its efforts to prove that Rodriguez was no longer required to wear a location monitoring device.
The prosecution opposed the case, arguing that Rodriguez’s house arrest was necessary to ensure that he would continue to appear in court. It also argued that the charges against Rodriguez for running a “cryptocurrency money laundering enterprise” were serious and that Rodriguez could face a prison sentence of up to 25 years.
The prosecution then cited evidence of handwritten pages it had obtained from Rodriguez’s home detailing how he would flee the country to a jurisdiction from which it would be difficult to extradite him. This information included a list of several passports as well as $10,000 in cash, a burner phone, an unused SIM card and several mnemonic phrases for crypto assets, among other items.
Rodriguez’s attorney argued that this plan related to what Rodriguez would do in a more general emergency, while the prosecution argued that this was Rodriguez’s current escape plan.
The prosecution stated that it was “a reasonably good plan” and that it would not be appropriate to stop monitoring Rodriguez at this time. However, the prosecution did say that it would consider granting Rodriguez certain freedoms if a petition were filed, without providing any details.
The judge did not grant any change to the bail conditions and asked both the prosecution and the defense to “get on with the case.”
Donate to the legal defense fund for Rodriguez and Hill via BPI P2P Rights Fund.