The Government's Case
Today I read this very well researched article in Bitcoin Magazine about the Samourai Prosecution. I highly recommend it, as it points out the very real problems the prosecution has with the indictment. I have also been following The Rage's "Where's Waldo" like attempt to track down William Lonergan Hill (TDev), whose whereabouts since the indictment are unknown.
I Smell A Rat
The lack of a case file probably seems unusual to a lay person, but I'm not surprised. I believe there is a good possibility that Mr. Hill may be cooperating with the federal government. This is the norm in federal criminal proceedings. The fact is I don't recall any case I handled in the Southern District involving multiple defendants where no one cooperated. Federal criminal penalties are severe, and just about all cases wind up with guilty pleas rather than jury trials. Both the government and defense lawyers know this. Here, it would be unrealistic to expect the defendants to be "stand up guys" for the sake of bitcoin. They and their lawyers are probably worried about their families and their freedom, not the future of self custody. I could be wrong, but in case I'm right, allow me to speculate as to how this case may play out.
Under US Federal Sentencing Guidelines, defendants can earn what is commonly known as a 5K letter, which gives the judge discretion to impose a very lenient sentecne if the defendant provides "material assistance to the government" in this case or other cases. The defendant must plead guilty to get this benefit. In the sleazy world of horse trading known as plea bargaining, the rule is you must net "a bigger fish." Therefore, I doubt one of these defendants would cooperate against the other, unless one of them was actually assisting a third party to launder actual criminal proceeds. More likely, Mr. Hill could offer the government a treasure trove of "criminals" who used the mixer for "criminal" purposes. I am ignorant of the technical aspects of the samourai wallet and its mixing capabilities, so I'm not sure whether this is possible by just examining transactions. If not, the cooperation would have to be based on actual communications with individuals who expressed criminal intent.
The Sword Of Damacles
Regardless of how this is done, it will likely be a bad outcome for bitcoin. If other cases are now being investigated, this case will be dragged out until those cases are prosecuted. This is because the government may need the cooperating witness to testify at trial.
Whether intentional or not, this scenario would accomplish exactly what the government seems to want. The chilling effect on the bitcoin industry has already been substantial. Developers will work for years while wondering whether their project will be targeted next. Questions about what constitutes a money transmitter will remain unresolved. At the same time, there is no trial, where the defense can present the obvious and powerful defenses that are explained well in the article I linked above.
I know this is a grim scenario. I may be completely wrong, since I am speculating. On the other hand, it's not far fetched. It would be the normal outcome of a case in federal court.