What Bitcoin Did
SAMOURAI WALLET & THE FIGHT FOR BITCOIN PRIVACY w/ Roger Burlingame & Zack Shapiro
- The U.S. government is prosecuting Samurai Wallet co-founders Bill and Kiyone under money transmitter and money laundering charges despite the wallet being non-custodial, representing a major deviation from FinCEN's 2019 guidance distinguishing custodial from non-custodial tools.
- The Bank Secrecy Act of 1970 was designed to regulate traditional financial institutions moving funds on behalf of clients; the government's novel argument in Samurai extends this to non-custodial software that merely coordinates peer-to-peer transactions without holding private keys.
- The Tornado Cash precedent (Judge Vela's ruling) held that immutable smart contracts and non-custodial tools can constitute money transmission even without control over funds, creating dangerous precedent for Bitcoin developers and privacy advocates.
- Discovery in the case involves over 100 terabytes of data (equivalent to the Library of Congress volume), requiring massive resources to mount an effective defense and highlighting how discovery volume is used as a litigation tactic.
- If the government's "no limiting principle" argument succeeds, it could criminalize Lightning Network operators, wallet developers, eCash mint operators, node operators, and Bitcoin miners—effectively banning self-custody in the United States.
- The case reflects a broader "crypto wars 2.0" paralleling 1990s encryption battles; while PGP code itself gained First Amendment protection, running that code on the internet remains legally ambiguous.