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Feds charge wallet developers despite FinCEN guidance

Friday, March 27, 2026 · from 2 podcasts
TFTC: A Bitcoin PodcastWhat Bitcoin Did
  • Prosecutors charged Samurai Wallet founders with money laundering after FinCEN told them their non-custodial tool was not a regulated business.
  • The IRS is deploying a perjury-backed audit questionnaire demanding a user's full crypto transaction history.
  • The parallel actions signal a coordinated regulatory escalation targeting Bitcoin privacy tools and their users.

The federal government is escalating its campaign against Bitcoin privacy on two fronts: prosecuting the developers of the tools and intimidating the users.

Lauren Rodriguez described to What Bitcoin Did how FBI agents raided her home to arrest her husband, Keone, a co-founder of the privacy-focused Samurai Wallet. Federal prosecutors charged him with money laundering conspiracy. This came six months after the prosecutors themselves asked FinCEN if the non-custodial wallet constituted a regulated money service business. FinCen said no, citing its longstanding guidance that software which doesn't hold customer funds is not subject to licensing.

The prosecution advanced anyway, which Rodriguez sees as a deliberate strategy to win, not to pursue justice. The case establishes a precedent that endangers any developer building privacy-enhancing Bitcoin software, regardless of existing regulatory opinions.

Meanwhile, the IRS is pressuring users. On TFTC, tax attorney Andrew Gordon detailed a new two-page audit questionnaire the agency is deploying. It demands a taxpayer’s complete cryptocurrency transaction history back to their first-ever transaction, with answers given under penalty of perjury.

Gordon warned this weaponized form, fueled by new data reporting from exchanges, is a trap for honest mistakes and a prelude to a wave of automated audits. Together, the legal actions against developers and the aggressive scrutiny of users create a pincer movement designed to chill the development and use of privacy-preserving Bitcoin tools.

Lauren Rodriguez, What Bitcoin Did:

- These are the prosecutors who brought charges asked, do you think, FinCEN, that Samurai Wallet is a money service business?

- And they had said emphatically, no, they're not because they don't take custody.

PrivacyRegulationCustody

Entities Mentioned

IRSConcept
Samurai WalletConcept
WhirlpoolConcept

Source Intelligence

What each podcast actually said

TFTC: A Bitcoin Podcast
TFTC: A Bitcoin Podcast

Marty Bent

#731: Fixing Broken Bitcoin Tax Policy with Andrew Gordon • Mar 25

  • The IRS is implementing a new two-page crypto audit questionnaire requiring taxpayers to list every crypto transaction back to their first activity, with responses sworn under penalty of perjury.
  • Tax attorney Andrew Gordon describes the IRS's new crypto audit form as unprecedentedly aggressive in both its scope and the legal risk it imposes on filers.
  • Gordon argues the IRS is weaponizing the audit questionnaire by turning honest reporting mistakes or forgotten transactions into potential perjury traps for taxpayers.
  • A major catalyst for the IRS's enforcement push is new Form 1099-DA data, which crypto exchanges will soon be mandated to report directly to the agency.
  • Gordon frames the draconian audit form as a precursor to a coming wave of automated IRS audits, which will be heavily powered by artificial intelligence.
  • The IRS's move signals a broader regulatory enforcement strategy targeting the crypto space, shifting from guidance to direct, data-driven audit pressure.
BTC MarketsRegulation
What Bitcoin Did
What Bitcoin Did

5 Years In Prison For Building A Bitcoin Wallet | Lauren Rodriguez • Mar 20

  • The founders of non-custodial Bitcoin wallet Samurai Wallet were charged with money laundering by the Southern District of New York despite FinCEN explicitly stating their service was not a regulated money transmitter.
  • Lauren Rodriguez argues prosecutors moved forward with the case against her husband knowing FinCEN's guidance, revealing a strategy based on winning convictions rather than truth or justice.
  • Rodriguez describes FBI agents conducting an armed pre-dawn raid on their Pittsburgh cottage, pointing lasers at them before handcuffing them and searching the property.
  • The Samurai Wallet case establishes a legal precedent that developers of privacy-focused Bitcoin tools can face federal prosecution even when operating non-custodial services.
  • Rodriguez warns the war on crypto is not over, signaling that building privacy-preserving tools with clear regulatory guidance can still lead to raids and prison sentences.
  • Samurai Wallet operated for nearly a decade on the Google Play Store without issue before the raid, offering privacy features like integrated Tor and a CoinJoin implementation called Whirlpool.
  • FinCEN had maintained clear guidance since 2013 that non-custodial wallet services do not qualify as money transmitters, a position it reaffirmed to prosecutors six months before the indictment.
BTC MarketsPrivacyRegulation

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