Samourai Wallet Case Could Be Latest to Collapse as DOJ Softens Stance

While Samourai Wallet asked for some more time in its legal battle, the DeFi Education Fund petitioned Trump to end the prosecution of Tornado Cash developer Roman Storm, and warned that it threatens open-source innovation. At the same time, Democratic senators Elizabeth Warren and Adam Schiff raised some serious ethical concerns over Trump’s meme coin rewards program. They argued that it could allow foreign actors to secretly buy political influence. Overall, it seems like federal prosecutors, crypto advocates, and lawmakers are clashing over key issues tied to President Donald Trump’s growing involvement in the crypto industry. Samourai Wallet Co-Founders Push to Delay Case Federal prosecutors and the co-founders of the crypto privacy tool Samourai Wallet asked a Manhattan court for more time to consider dismissing their case after a big shift in the US Department of Justice’s approach to cryptocurrency enforcement. In a joint letter that was submitted on April 28, lawyers for Samourai Wallet CEO Keonne Rodriguez and CTO William Hill, along with government prosecutors, requested a 16-day extension to the pretrial motions schedule. This move was made after the Justice Department’s rollback of its crypto enforcement efforts under a new directive issued by Deputy Attorney General Todd Blanche. Part of the letter that was sent to Judge Berman Defense attorneys previously wrote to Acting Manhattan US Attorney Jay Clayton on April 10 to seek dismissal of the charges. The attorneys specifically referenced Blanche’s April 7 memo that pointed out that the DOJ is not a digital assets regulator and would henceforth focus only on cases involving fraud or the use of crypto in broader criminal activity. Discussions between the defense and prosecutors happened in person on April 24 at the US Attorney’s Office. The letter stated that the continuance will help defendants avoid the very large costs associated with preparing motions while the government evaluates its stance. Prosecutors agreed to the schedule change without taking a position on the merits of the dismissal request. Samourai Wallet website Rodriguez and Hill were charged in April of 2024 with conspiracy to commit money laundering and operating an unlicensed money transmission business, charges to which they have pleaded not guilty. The proposed new deadlines will move motions to May 29, responses to June 26, and replies to July 10, though the trial is still scheduled to begin in early November. This now adds to a growing number of cases being challenged or delayed due to the Trump administration’s more crypto-friendly policies. Earlier this month, SafeMoon CEO Braden John Karony pointed to Blanche’s directive in seeking dismissal of his fraud and money laundering case. Trump Pushed to Protect Open Source Developers The DeFi Education Fund also recently formally petitioned the Trump administration to intervene in what it described as the “lawless prosecution” of open-source software developers. The Fund specifically referred to the case of Roman Storm, co-creator of the crypto mixing service Tornado Cash. In an April 28 letter addressed to White House crypto czar David Sacks, the group urged President Donald Trump to immediately halt the Department of Justice’s efforts to criminalize software development. They believe this is rooted in the Biden administration’s policies. Part of the letter that was sent to David Sacks The petition centers around Storm’s ongoing prosecution, where he faces charges related to allegedly helping launder more than $1 billion through Tornado Cash. His trial is scheduled for July. His co-founder, Roman Semenov, is still at large and is believed to be in Russia. The DeFi Education Fund criticized the DOJ’s approach by arguing that holding developers accountable for the actions of third parties using their code is fundamentally flawed and could set a very dangerous precedent that freezes innovation across the crypto industry. The group pointed out that the current prosecution runs contrary to guidance issued by the Treasury Department’s Financial Crimes Enforcement Network during Trump’s first term, which stated that developers of self-custodial, peer-to-peer protocols are not considered money transmitters. They warned that the existing legal climate empowers politically motivated enforcement and places all open-source developers at risk, not just those in crypto. The petition also thanked Trump for his vocal support of the cryptocurrency industry and his ambition to make the United States the global hub for digital innovation, but still that this goal is unattainable if developers face criminal penalties for building enabling technologies. The group urged the administration to protect American developers, reestablish clear legal frameworks, and bring an end to what they called unlawful overreach by the DOJ. Jake Chervinsky , chief legal officer of Variant Fund, agreed with this. He called the Justice Department’s case against Storm an outdated remnant of the Biden administration’s anti-crypto stance. He also firmly believes that prosecuting developers for launching non-custodial smart contracts has no valid basis in law or policy. So far, the petition gathered more than 230 signatures from well known people in the crypto space, including Coinbase co-founder Fred Ehrsam, Paradigm co-founder Matt Huang, and Ethereum core developer Tim Beiko. Concerns Mount Over Trump Meme Coin While some are asking Trump to be even more lenient on the crypto industry, others have some tough questions to ask the President. Massachusetts Senator Elizabeth Warren and California Senator Adam Schiff called on US government officials to investigate potential ethical and constitutional violations surrounding President Donald Trump’s involvement with his meme coin and media company. Warren and Schiff’s letter to Jamieson Greer In an April 25 letter to Jamieson Greer, acting director of the US Office of Government Ethics, the two Democratic senators raised concerns about Trump’s recent announcement offering a private dinner and White House tour to top holders of the TRUMP token. They requested information on safeguards against the possibility that foreign actors or other individuals could purchase political influence through investments in the meme coin, which could potentially affect presidential policy decisions and federal pardons. The senators warned that Trump’s offer could also violate federal bribery statutes and the Constitution’s emoluments clauses, and argued that exchanging exclusive access to the presidency for financial investments in his ventures presents a serious conflict of interest. They also mentioned the risk that foreign entities could leverage the meme coin to buy influence without actually disclosing their identities. On the same day, Warren also reportedly contacted SEC Chair Paul Atkins, and urged him to ensure that any oversight of Trump’s media company remains free from political interference. Although Warren is a ranking member of the Senate Banking Committee, she cannot unilaterally set the Congressional agenda with Democrats currently in the minority. Nonetheless, pressure on Trump has been building, with two Democrats already calling for his impeachment over the meme coin-linked event. Warren believes that the American public must have complete assurance that the presidency is not being sold to the highest bidder for the president’s financial gain.

Source: Coinpaper