Bitcoin privacy and coin mixing service Samourai is having a big week in court, with both co-founders facing charges of conspiracy to launder money and conspiracy to operate an unlicensed money transmitter in the Southern District of New York.
William Lonergan Hill and Keonne Rodriguez are accused by the FBI of facilitating at least $100 million worth of money laundering transactions for illegal operatives.
Although the two men appeared together in a US courtroom for the first time this week, there wasn’t much legal action of consequence. Nevertheless, proceedings in another coin mixer case involving are set to have a significant bearing on Samourai’s defense.
First things first, the duo opened their day on Wednesday in front of the judge to request a delay of their trial date. They asked for more time to review several terabytes of discovery data that they received less than five weeks ago.
Despite characterizing the size of the data through metaphors like “to the moon and back 22 times” or “75% of the amount of information in the Library of Congress,” the judge denied their request and scheduled a follow-up hearing to discuss the data for December 17 at 10am.
Rodriguez also requested freedom from home detention and his physical geolocation tracker, however, the judge denied this request.
Read more: Who are Samourai Wallet’s Keonne Rodriguez and William Lonergan Hill?
Control of user funds: Precedent from Tornado Cash
Despite the topic of Samourai’s control of users’ funds not coming up during this week’s court proceedings, because Tornado Cash and Samourai were similar privacy and coin mixing services, some of their legal issues overlap.
Specifically, whether Tornado Cash or Samourai ever controlled their users’ funds while transmitting them is a critical legal issue.
By deciding an issue in the Tornado Cash case (U.S. v. Roman Storm and Roman Semanov), US District Court Judge Katherine Polk Failla will set precedent over whether Samourai’s ‘control’ (or lack thereof) of its users’ coins was a prerequisite for its operation of an unlicensed money transmission business.
For context, Hill and Rodriguez argue that they never controlled users’ bitcoin through Samourai, supposedly making it impossible for them to have transmitted money that they never controlled in the first place. The FBI disagrees, arguing emphatically that control of money is not a prerequisite of money transmission.
Roman Storm is on a $2 million bond to appear in court on November 30. By that date, legal experts anticipate that Judge Failla will announce her decision over the contentious ‘control’ issue in the Tornado Cash proceeding.
If Judge Failla decides that control is a prerequisite for money transmission, it will be a win for Samourai. If the judge decides that control is not a prerequisite, Samourai’s co-founders’ arguments that they never controlled users’ funds will lose a substantial portion of its defensive power.
