United States v. Rodriguez and Hill
How a Bitcoin privacy prosecution became a stress test for open-source software in America.
01Executive Summary
Two American open-source software developers are now in federal prison for writing a Bitcoin wallet that the U.S. Treasury's own Financial Crimes Enforcement Network told prosecutors did not require a money-transmitter license. Treasury said so in August 2023. The defendants were not informed for 20 months. By the time they were, the indictment had been hardened, the regulatory experts were locked out of the courtroom, and the leverage had shifted decisively. They pleaded to the lesser count. The judge handed down the maximum.
Keonne Rodriguez (37, of Pennsylvania) and William Lonergan Hill (67) co-founded Samourai Wallet, a non-custodial Bitcoin wallet built to give users financial privacy. The features that make Samourai useful are the same features that protect a domestic-violence survivor moving money away from an abuser. They protect a journalist paying sources in a closed regime. They protect a humanitarian worker funding aid in a sanctioned jurisdiction. They protect a dissident in Iran, China, Belarus, or Russia surviving under a government that uses banking surveillance to identify and punish political opposition. Privacy tooling is dual-use the way Tor is dual-use, the way Signal is dual-use, the way cash itself is dual-use.
The Department of Justice charged Rodriguez and Hill in February 2024 under 18 U.S.C. § 1960 and § 1956. FinCEN's controlling 2019 guidance, issued five years earlier, held that non-custodial wallets are software providers, not money transmitters. Prosecutors knew this. They prosecuted anyway.
This document explains why the case matters beyond two defendants. Every American who writes, publishes, or uses open-source software has an interest in the outcome. Senators Cynthia Lummis and Ron Wyden warned about exactly this on May 9, 2024. The president has signaled he will look at clemency. Bipartisan legislation is moving in the 119th Congress. The window to act is open.
02Why This Matters Beyond Two Defendants
Software is speech. Code that you write, publish, and let others use is a form of expression the Ninth Circuit has held the First Amendment protects (Bernstein v. United States Department of Justice, 1999). Non-custodial software is the most defensible end of that spectrum. It is code that helps a user transact peer-to-peer without ever taking possession of the user's funds. It is the software equivalent of an envelope manufacturer. The user fills the envelope. The user mails it. The manufacturer never touches the contents.
The Samourai prosecution treats the act of writing and publishing such software as operating a financial business that must be licensed by all 50 states. If that theory holds, the same logic reaches farther than most policymakers realize.
| Software category | Same legal exposure if Samourai theory holds |
|---|---|
| Bitcoin and Lightning wallets (BlueWallet, Phoenix, Sparrow, Mutiny, Wasabi, Zeus) | Identical non-custodial design |
| Ethereum wallets and privacy tools (MetaMask, Tornado Cash) | Already prosecuted in parallel |
| End-to-end encrypted messengers (Signal, Session, SimpleX) | Same "we cannot see, therefore we enable" theory |
| Tor, VPNs, mesh networking | Same anonymity-as-design framing the superseding indictment used |
| Future open-source AI agents and autonomous software | The "designed for criminals" pleading template is portable |
The chilling effect is documented. American open-source crypto developers have begun relocating to friendlier jurisdictions, pseudonymizing their published work, or abandoning projects entirely. The cost of that shift is paid by every American who values strong encryption, financial privacy, and the freedom to publish working code.
03Cast of Characters
The defendants
The judges
The prosecution
The defense
Civil society voices the court refused to hear
Coin Center · Blockchain Association · DeFi Education Fund · Bitcoin Policy Institute. All four moved to file amicus briefs. The court denied amicus participation. DEF and Blockchain Association published their joint brief publicly after the rejection.
The senators on the record
Sen. Cynthia Lummis (R-WY) and Sen. Ron Wyden (D-OR) sent a bipartisan letter to AG Merrick Garland on May 9, 2024 — one-year anniversary of FIN-2019-G001 to the day, possibly deliberate.
04The Procedural Record · Six Documented Dirty Tricks
Tap any item to expand. The first is opened by default for context.
On August 23, 2023, prosecutors at the Southern District of New York held a call with officials at the Financial Crimes Enforcement Network. They asked whether Samourai Wallet, a non-custodial Bitcoin privacy wallet, was a money transmitter under FinCEN's regulations. FinCEN told them it was not. The reasoning was already on the books. FinCEN Guidance FIN-2019-G001, issued May 9, 2019, provides at § 4.2 that an unhosted, non-custodial wallet is a software provider rather than a money transmitter.
In February 2024, six months after that call, prosecutors indicted Rodriguez and Hill for operating an unlicensed money-transmitting business. The defense was not told about the August 2023 call until April 1, 2025, approximately twenty months after it occurred.
When confronted, the government argued that the FinCEN officials' statements were merely "individual, informal and caveated opinions," that legal opinions are not Brady material, and that only "facts" qualify (Government letter to court, May 9, 2025). The court did not dismiss. Treasury's own bureau of jurisdiction told the prosecutor the theory of the case was wrong. The prosecutor sat on it.
Rather than respond to the original motion to dismiss on its original facts, the government filed a superseding indictment. The language hardened in two specific ways. The original allegation said the defendants had "knowledge and intent for criminal proceeds to be laundered." The superseding indictment said they "knew and intended": definitive, not conditional. The superseding indictment also added an entirely new paragraph alleging Samourai was "designed in whole and in part for the purpose of being used by criminals."
This is a re-pleading to a tougher posture. It is the procedural equivalent of a witness who, asked the same question twice, gives a more incriminating answer the second time.
When Coin Center, the Blockchain Association, the DeFi Education Fund, and the Bitcoin Policy Institute moved to file amicus briefs, the court denied amicus participation. These are the four organizations in the United States with the deepest expertise on the regulatory framework at issue. They had no party stake.
The court refused. DEF and the Blockchain Association published their joint brief publicly after the rejection. The court ruled on the motion to dismiss without that expertise on the docket.
On April 7, 2025, Deputy Attorney General Todd Blanche issued a memorandum titled "Ending Regulation by Prosecution." The memo disbanded the National Cryptocurrency Enforcement Team, directed DOJ to stop pursuing litigation that "has the effect of superimposing regulatory frameworks on digital assets," and stated DOJ "plans to close all ongoing investigations that are inconsistent with the new policy."
The Samourai prosecution was, on its face, exactly the kind of case the Blanche memo was written to end. SDNY proceeded anyway.
The case was reassigned from Judge Richard Berman to Judge Denise Cote in approximately July 2025, at the moment of maximum defense leverage. After the Brady disclosure. After the Blanche memo. In the middle of dismissal briefing. The reason for the reassignment is Awaiting more data in the public record.
What is visible: Judge Cote, a former Chief of SDNY's Criminal Division, took the plea and imposed the statutory maximum on Rodriguez, citing "general deterrence."
The plea came after the Brady motion stalled, after the superseding indictment hardened the exposure to 25 years combined, and after amicus support was excluded. The defendants traded the 20-year money-laundering count for the 5-year unlicensed-money-transmitter count. The count they pleaded to is the same count FinCEN had told prosecutors did not apply.
Judge Cote then imposed the maximum on that count. Five years for Rodriguez. Four for Hill. The plea also forecloses appellate review of every procedural issue above.
05Visual Timeline
06Honest Counterpoint · The Strongest Version of the Government's Case
Any legislator about to spend political capital on this should know the strongest version of the prosecution's case before adopting a position. Four points belong on the table.
DOJ alleged that of the approximately $2 billion in lifetime transaction volume processed through Whirlpool and Ricochet, approximately $237 million had a criminal nexus. Hill's own guilty-plea allocution acknowledged that the wallet was, at points, marketed in a way that anticipated and encouraged some criminal use.
Section 1960 is a strict-liability operational offense. A license is required regardless of whether the operator personally laundered any money. The conduct of operating an unlicensed money-transmitting business is the offense. The plea was to that conduct.
FinCEN's August 2023 statements, on the government's reading, were informal staff opinions, not a formal regulatory determination. Treasury never issued a binding determination that Samourai specifically was outside the regime.
The defendants pleaded voluntarily, with experienced counsel, and were not convicted by trial under a contested theory. The Tornado Cash hung-jury contrast cuts both ways. It shows the theory is contestable. It also shows that the § 1960 count did get a unanimous conviction when a jury heard it.
That is the government's case at its strongest. Four problems remain.
- "Strict liability" plus "you should have known" applied to publishing software is a category error. The unlicensed-money-transmitter statute was written to address Western Union and Hawala-style operations that take in dollars and pay out dollars. It was not written to address the act of writing C++ in public.
- An "informal staff opinion" by the Treasury bureau most expert in this exact question should at minimum be disclosed to the defense in real time. The Brady dispute is about timing, not weight.
- A guilty plea entered under a 25-year combined exposure ceiling, after exculpatory regulatory guidance was buried for 20 months, is not the kind of "voluntary" the system promises. The plea forecloses appellate review of the procedural conduct that made the plea inevitable. That is a feature for the prosecutor and a defect for the rule of law.
- The Storm verdict shows what happens when this theory faces a jury without that procedural compression. It splits.
07What an Elected Official Can Do
Five vehicles are available right now.
08Sources & References
Tap any category to expand its source list.
Primary documents
- FinCEN Guidance FIN-2019-G001 (PDF)
- Blanche Memo, "Ending Regulation by Prosecution"
- EO 14178, Digital Financial Technology
- Strategic Bitcoin Reserve fact sheet (EO 14233)
- DOJ-SDNY sentencing release
- DOJ-SDNY guilty-plea release
- Sealed Superseding Indictment
- H.R. 3533, Blockchain Regulatory Certainty Act
- Sen. Lummis press release on Garland letter
- Rep. Emmer press release on BRCA
Brady dispute
Blanche memo & DOJ policy shift
Bench reassignment, Tornado Cash, plea & sentencing
Senatorial position & amicus
09Disclosed Soft & Hard Blocks
10MØNTAN1 Notes
A republic that prosecutes the publication of working code under a statute written for Western Union has a problem. The Samourai prosecution did not arise in a vacuum. It is the visible end of a longer drift, in which the executive branch's interpretive discretion expanded into territory the legislature never authorized and the courts never sanctioned. The Lummis-Wyden letter saw it coming in May 2024. The Blanche memo named it in April 2025. The Tornado Cash split verdict tested it in August 2025. The Samourai plea closed the appellate door before any of those signals could reach the bench in the form of a ruling.
The remedy is legislative clarity, executive review, and clemency for two specific defendants. None of these are radical. All three are on the table right now. The difference between a republic that protects open-source software and one that does not is the difference between elected officials who use the vehicles available to them and those who do not.