Hope for Samourai Wallet devs as crypto laundering charges might be dropped

After a series of fortunate events, developers of one of the top Bitcoin (BTC) privacy-focused wallets, Samourai, might see their charges dropped, as even prosecutors now mull the idea.

In a joint letter to Southern District of New York Judge Richard M. Berman, prosecutors and Samourai Wallet lawyers are asking for a 16-day extension, as prosecutors are looking into the possibility of dropping the case.

The reason for this is a Memorandum on Ending Regulation by Prosecution issued by Deputy Attorney General Todd Blanche on April 7, as the U.S. Department of Justice decided to disband its crypto-focused enforcement team and stop pursuing criminal cases against, among other things, crypto exchanges and so-called crypto mixers. According to the memo, prosecutors will pursue criminals themselves and not platforms that are being used by illicit actors.

Samourai Wallet offered BTC mixing services that help improve Bitcoin users’ privacy by obfuscating transaction history. The website of the wallet was seized, and Samourai's developers, Keonne Rodriguez and William Lonergan Hill, were arrested in April 2024 on charges of conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business.

Back then, prosecutors claimed that Samourai Wallet helped to launder more than $100 million, while the arrested developers made $4.5 million in fees.

Meanwhile, after Blanche's memo, pro-Bitcoin Jay Clayton, former head of the U.S. Securities and Exchange Commission, was appointed as the acting attorney for the Southern District of New York, increasing chances for the Samourai developers' defense to build their case. The lawyers of Rodriguez and Hill have already asked Clayton to dismiss the case and met with the prosecutors and their supervisors in person.

The arrest faced backlash from many prominent Bitcoiners and privacy advocates, as it's being considered an attack on free speech and software developers in general.

In either case, if the charges are dropped, this would be another big win for privacy-enhancing technologies and the cryptoassets industry. Popular crypto mixer Tornado Cash has already been removed from the U.S. sanctioned entities list yearlier this year, while this week, a U.S. court banned the Treasury from relisting the mixer on the sanctions list.