Take your emotions out of it and look at this logically.
1. They ran back end servers that made whirlpool service possible.
2. They coordinated mixing transactions through Samourai controller servers. They decide the timing, mixing and distributions of mixed coins and made money running it as a business.
They might be able to beat the money laundering conspiracy but and it is clear they are running an illegal MSB, however unfair you think the law is.
The prosecution in the case contacted the regulator (FINCEN) and asked if they qualify as an MSB, they were told no, which is in line with FINCEN guidance shared since 2013.
It doesnβt matter what the FinCen regulator says. It is up to the DOJ to prosecute or not.
If they believe they are innocent, then fight it in court and donβt plead guilty.
If there was prosecutorial misconduct, go to trial and and then appeal but they pleaded guilty instead.
Of course it matters what the regulator says. How were they supposed to play by this imaginary law if that very regulator literally says βyou are not an MSBβ.
Also about pleading guilty. Easy for you to say when youβre sat behind a keyboard and not staring down the barrel of your good years behind bars.
Read through the court docs. It was plain to see the judge wanted to make an example of them here.
DOJ is not bound by what a regulator says, they have to prove it in a court of law what they indicted them for.
So if you believe you are not guilty then Fight it in court.
They canβt have it both ways. Either they are innocent and prove it or they plead guilty to lesser charge and make it all go away.
You canβt limit your downside and at the same time want unlimited upside. There is no incentive for DOJ to deal. The world doesnβt work that way.
The crux of the matter is they created a software, use it to make money as a business without registering with FinCen. They gonna get you on this technicality 100% of the time, no matter how unfair you think the law is.
They couldnβt register with FINCEN per FINCENs own guidelines. FINCEN said they do not fit the criteria to be a MSB.
I donβt know how much clearer I can make this for youβ¦
You are conflating 2 issues.
They claimed prosecutors talked to staffer that claimed they donβt qualify as MSB.
FinCen never issued a formal ruling that Smourai didnβt have to register.
And the whole thing is moot when they pleaded guilty to running an illegal MSB.
The most important thing you have to understand.
FinCEN guidance β binding law
βUnhosted wallets are software hosted on a personβs computer, phone, or other
device that allow the person to store and conduct transactions in CVC. Unhosted wallets do not require an additional third party to conduct transactions. In the case of unhosted, single-signature wallets, (a) the value (by definition) is the property of the owner and is stored in a wallet, while (b) the owner interacts with the payment system directly and has total independent control over the value. In so far as the person conducting a transaction through the unhosted wallet is doing so to purchase goods or services on the userβs own behalf, they are not a money transmitter.β
https://www.fincen.gov/system/files/2019-05/FinCEN%20CVC%20Guidance%20FINAL.pdf
What does this have to do with anything? They ran whirlpool on their servers and made money from mixing and distributing mixed coins as a business without registering with FinCen. Thatβs where they got them.
Not creating an unhosted wallet.
