Deniz 
During a Tuesday hearing in a Southern District of New York court, Samourai Wallet founder Keonne Rodriguez—who was arrested in April on allegations of running an unlicensed money transmitter—was rejected amendments to his bail conditions.
Defense Seeks Bail Amendments
In part to cover his legal bills, Rodriguez’s defense lawyers sought two changes to his bail: elimination of a home detention mandate and lessened limits on his ability to interact with cryptocurrencies.
But considering the seriousness of Rodriguez’s offense, the possibly long sentence should he be proven guilty, and handwritten notes purportedly outlining an escape plot, prosecutors effectively claimed Rodriguez should be considered a flight risk.
Allegations and Bitcoin Privacy Tools
Rodriguez, co-founder William Lonergan Hill, former CTO of Soie LLC., and product lead at Blockchain.com before working on Samourai, face money laundering allegations in relation to the development of the Samourai Wallet, a bitcoin-focused app with a privacy-preserving mixing tool to hide user identities. Prosecutors claim the non-custodial Samourai Wallet helped to enable over $2 billion in illegal activities.
For many Bitcoin supporters, who perceive the two developers arrested during over a decade of operation as government overreach, the case has evolved into something of a cause celebre. Legal analysts specifically worry that an unfavorable decision for Rodriguez and Hill will allow authorities to target any non-custodial software based on precedent.
Senators Cynthia Lummis (R-Wyo.) and Ron Wyden (D-Ore.) penned a letter in May voicing concerns over the Department of Justice’s “unprecedented interpretation” of a statute extending prohibitions against “unlicensed money transmitting businesses” given the risks possessed to “crypto asset software services” and the lack of “clear intent” from Congress.
The senators noted that consumers of non-custodial crypto service providers retain sole possession and control of their crypto assets; hence, they cannot be categorized as money-transmitting companies. Lummis and Wyden underline that creators of autonomous software should not be responsible for the way those tools are applied.
This is basically what Rodriguez’s counsel told the court on Tuesday—that the defendant believes he did not commit a crime. For their money laundering and transmission accusations, Rodriguez and Hill each risk a 25-year maximum jail sentence.
The continuous case against co-founders Roman Storm and Roman Semanov of Tornado Cash, who helped create and promote the Ethereum-based decentralized token tumbler, raises similar questions. Judge Katherine Polk Failla of the U.S. District Court is reviewing evidence on whether founders must keep “control” of users’ crypto assets in order to be judged money transmitters.
Though the protocol is independent, a prior decision concerning Tornado Cash co-founder Alexey Pertsev in a Dutch court found him guilty of money laundering. Roman Sterlingov, the founder of Bitcoin Fog, was found guilty in April on like allegations.
Tuesday was the first time Rodriguez and Hill had shown up in court together since they were arrested. December 16 is the scheduled trial date.
Rodriguez tweeted, “Bitcoin isn’t about buying a latte with your mobile phone; it is about making the transactions they say you can’t make,” around the time Samourai launched.
You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.