The bitcoin privacy and coin mixing service Samourai is currently in the spotlight in court, as both co-founders are facing charges related to conspiracy for money laundering and operating an unlicensed money transmitter in the Southern District of New York.
The FBI has accused William Lonergan Hill and Keonne Rodriguez of enabling over $100 million in money laundering transactions on behalf of illegal operatives.
Although the two men made their first joint appearance in a U.S. courtroom this week, there wasn’t significant legal progress. However, developments in another coin mixer case are expected to greatly influence Samourai’s defense strategy.
On Wednesday, the pair began their day before the judge by requesting a postponement of their trial date. They sought additional time to examine several terabytes of discovery material they received just under five weeks ago.
The judge, however, denied their request despite their vivid descriptions of the data size, which included comparisons like “to the moon and back 22 times” and “75% of the information in the Library of Congress.” A follow-up hearing to discuss the data has been set for December 17 at 10am.
Rodriguez also asked to be released from home detention and the physical geolocation tracking system, but the judge denied this request as well.
Read more: Who are Samourai Wallet’s Keonne Rodriguez and William Lonergan Hill?
User Funds Control: Insights from the Tornado Cash Case
Even though the question of Samourai’s control over user funds did not arise during this week’s court session, the parallels between Tornado Cash and Samourai as similar privacy and coin mixing services mean some legal issues intersect.
A crucial legal matter is whether Tornado Cash or Samourai ever had actual control over user funds during transactions.
US District Court Judge Katherine Polk Failla will create precedent regarding whether Samourai’s ‘control’ (or lack thereof) of its users’ coins is necessary to determine its role as an unlicensed money transmission business through the ongoing case regarding Tornado Cash (U.S. v. Roman Storm and Roman Semanov).
In their defense, Hill and Rodriguez maintain that they never had possession of users’ bitcoin via Samourai, suggesting that they cannot be held accountable for transmitting funds they never possessed. The FBI contends otherwise, asserting that control of funds is not a necessary factor for money transmission.
Roman Storm is currently out on a $2 million bond and is scheduled to appear in court on November 30. It is expected that Judge Failla will render a decision on the pivotal ‘control’ issue in the Tornado Cash case by this date.
If Judge Failla concludes that control is required for money transmission, it will be a favorable outcome for Samourai. Conversely, if she finds that control is not necessary, the argument that the co-founders never managed users’ funds will be considerably weakened.
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