SDNY/DOJ crypto-privacy prosecution practices — Samourai, Roman Storm/Tornado Cash, Pertsev, and the broader pattern (neutral)

Built 2026-06-13 from research/spec-sdny-crypto-prosecution.json. Verified: DOJ/SDNY + IRS-CI press, CoinDesk/Bitcoin Magazine/crypto.news (the FinCEN call + Brady motion), Mayer Brown/National Law Review (verdict analysis), Dutch court reporting (Pertsev), Coin Center (the code/privacy critique), FinCEN's 2019 guidance.

Neutral by design. This maps both the prosecution's rationale (real laundering, incl. DPRK; the unlicensed-money-transmitter statute) and the defense/critique (FinCEN's own view that non-custodial software isn't a transmitter; an alleged Brady non-disclosure; a DOJ policy memo rejecting this model that SDNY proceeded against anyway; "criminalizing neutral code"; a jury that hung on the serious counts). "Malicious prosecution / corruption" is your framing — recorded as the open question, not asserted. The counterweight (Tornado Cash laundered $1B+ incl. for Lazarus) is given equal billing.

1. Samourai Wallet (SDNY)

US v. Rodriguez & Hill — founders of the non-custodial Bitcoin mixing wallet; charged Apr 2024 (money-laundering conspiracy + unlicensed money-transmitting).

• Prosecution: Whirlpool/Ricochet used to launder >$100M of criminal proceeds; operating as an unlicensed transmitter.
• The exculpatory FinCEN call (fact): on Aug 23 2023, FinCEN personnel told prosecutors they did not believe Samourai was a "money-transmitting business" because it's non-custodial (consistent with FinCEN's 2019 guidance). Charges were filed ~6 months later anyway.
• Alleged Brady violation (fact): defense said DOJ withheld that call for ~14 months; the motion to dismiss was denied without a written opinion (May 2025).
• Blanche memo vs continuation (fact): Apr 2025 — DOJ disbanded the National Cryptocurrency Enforcement Team and told prosecutors to stop targeting mixers/non-custodial wallets for users' conduct. Samourai prosecutors sought a 16-day extension to consider dropping — but did not drop it.
• Outcome: Rodriguez & Hill pleaded guilty; sentenced to 5 and 4 years (Judge Cote, Nov 2025) — i.e., the prosecution proceeded to conviction despite FinCEN's stated view and the DOJ policy memo rejecting this model.

2. Roman Storm / Tornado Cash (SDNY)

• Verdict (Aug 6 2025): convicted on conspiracy to operate an unlicensed money-transmitting business; the jury hung (after Allen charges) on the more serious money-laundering and sanctions-evasion conspiracy counts. DOJ requested a retrial (Mar 2026, proposed Oct 2026).
• Prosecution: Tornado Cash laundered >$1B, incl. DPRK/Lazarus Ronin proceeds; Storm knowingly operated/profited.
• Critique: the contracts are immutable, non-custodial — Coin Center argues prosecuting this "criminalizes the publication of software code." SDNY argued the FinCEN/Samourai opinion was "irrelevant" to Storm (disputed). The hung counts themselves bear on the theory's strength. Developer-liability precedent: unsettled.

3. Alexey Pertsev (Netherlands)

Tornado Cash co-developer convicted (May 2024), 64 months, for facilitating ~$1.2B of laundering; a judge called the tool primarily criminal. Released pending appeal (electronic monitor). Fact.

4. The broader pattern (and its tensions)

• The money-transmitter theory on non-custodial software — applying the unlicensed-transmitter statute to devs who never custody funds, in tension with FinCEN's 2019 guidance. The central unsettled question. Contested.
• The OFAC track (separate): OFAC sanctioned the Tornado Cash immutable code (Aug 2022); the 5th Circuit vacated it (Nov 2024) and Treasury lifted it (Mar 2025) — a court rejecting the parallel sanctions theory even as the criminal cases proceeded (spec-onchain-threat-actor-addresses). Fact.
• Chilling effect: privacy-wallet/mixer operators (Wasabi/zkSNACKs, Phoenix) restricted or exited the US. Fact.
• Selective-enforcement concern: incumbent banks ran dollar tokens (JPM Coin) while crypto-native privacy devs faced criminal charges (cf. the Ripple-vs-JPM-Coin asymmetry, spec-crypto-banking-debanking). Contested concern.
• Policy whipsaw: the 2025 deregulatory posture (Blanche memo, OFAC vacatur, the SEC/CFTC reset) sits awkwardly beside SDNY continuing Samourai to a guilty plea — the executive saying "stop" while a US Attorney's office proceeded. Fact (the tension).

5. The counterweight (neutrality)

The harm was real: Tornado Cash processed >$1B of illicit flows including DPRK/Lazarus proceeds; Samourai mixed criminal funds; Pertsev (Dutch) and Storm (one count) were convicted. The defensible prosecution interest — money-laundering and sanctions evasion — is real. The dispute is whether the money-transmitter/developer-liability theory is the lawful way to reach it, and whether these specific prosecutions' conduct (the FinCEN non-disclosure; proceeding against the policy memo) was proper. Both sides stated; neither "corruption" nor "pure persecution" is asserted as a finding.

6. Why it whipsawed — the causality

The block above documents the whipsaw; here is why it happened, and why the reversal is asymmetric.

• The crackdown (2022–2024): post-Terra/FTX pressure to be seen acting + a genuine laundering/sanctions rationale (DPRK/Lazarus ran $455M Ronin + more through Tornado Cash), under a Biden DOJ + Gensler SEC "regulation by enforcement" posture — supplying both the motive and the cover for novel theories (immutable-code OFAC sanctions; money-transmitter liability on non-custodial devs). Fact + labeled interpretation (motive).
• The reversal (2025), stacked: (1) a court loss — Van Loon (5th Cir., Nov 2024) → OFAC delists Tornado Cash (Mar 21 2025); (2) an administration change; (3) the crypto industry's record political spending (the Fairshake Super-PAC bloc among the largest of the 2024 cycle, influence-congress-funding-compromise); (4) the "regulation by prosecution" critique winning inside DOJ → the Blanche memo (Apr 7 2025, NCET disbanded), SEC dismissals (Coinbase Feb; Kraken/Consensys/Ripple Mar 2025), the Fed/OCC/FDIC withdrawal of crypto/debanking guidance (~Apr 2025), and the GENIUS Act (Jul 2025). Fact.
• The asymmetry (the causal tell): the whipsaw is not symmetric. Deregulation flowed to the surviving, compliant industry (exchanges, stablecoin issuers, registered firms) — while the privacy-tool developers prosecuted in the crackdown phase stayed convicted: Samourai's founders pled guilty and were imprisoned (5y/4y, Nov 2025) after the Blanche memo — the clean counterexample showing mixer/privacy prosecutions survived the "stop" order; Storm stands convicted on one count (retrial sought); Pertsev sits on 64 months. Across both phases the outcome is consistent: financial-privacy / disintermediation loses; identified, compliant, intermediated rails win. Fact (the dispositions) + labeled interpretation (the consistent-outcome read).
• Ties to re-platforming: this is the enforcement half of the field-clearing dynamic in spec-market-plumbing-control §7b — the crackdown removed the censorship-resistant challengers; the reversal rewards the compliant incumbents who will build the re-platformed, identity-bound rails. Net effect, independent of intent: an open challenger layer replaced by a controlled incumbent one.

Sources: DOJ SDNY — Samourai founders sentenced 5/4 years; CoinDesk — Samourai files to dismiss citing FinCEN guidance; CoinDesk — prosecutors weigh dropping under new DOJ priorities; CoinDesk — Roman Storm guilty (partial verdict); Mayer Brown — the mixed verdict & developer liability; Decrypt — Pertsev released pending appeal; Coin Center — Tornado Cash is a privacy/free-speech tool.

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