SDNY Faces Accusations of Violating Bitcoin Executive Order

Key Highlights

• The Southern District of New York (SDNY) and the DOJ are accused of selling $6.3 million in Bitcoin forfeited from the Samourai Wallet case, which directly violates President Trump’s 2025 Executive Order
• The funds came from the guilty plea of Samorai Wallet founders, who forfeited 101.213 BTC as part of their agreement after being charged with operating an unlicensed money-transmitting business
• This controversy sparked after previous accusations of prosecutorial overreach in the same case

According to the latest report, Federal prosecutors in the Southern District of New York, along with the Department of Justice, are facing serious accusations. 

They are alleged to have sold millions of dollars in seized Bitcoin, a move that may have directly violated an Executive Order from U.S. President Donald Trump. 

The main story revolves around Bitcoin forfeited in the case against Samourai Wallet, a privacy-based cryptocurrency service. Reports show that approximately 101 Bitcoins, worth about $6.3 million, were sold by authorities. This action contradicts Executive Order 14233, which President Donald Trump signed on March 6, 2025. 

That executive order created the U.S. Strategic Bitcoin Reserve. It clearly mandated that all Bitcoin accumulated through “federal forfeitures” must be kept as a national reserve asset and clearly prohibited its sale. 

The Samourai Wallet Case and the Forfeiture

The cryptocurrency holdings in question came from the prosecution of Samourai Wallet’s founder, Keonne Rodriguez, and William Lonergan Hill. These two men were arrested in April 2024. They faced charges of operating an unlicensed money transmitting business and conspiracy to commit money laundering. 

Prosecutors argued that their platform’s privacy tools, known as Whirlpool and Ricochet, facilitate over $237 million in illegal transactions. These included funds linked to dark web markets like Silk Road and Hydra. In August 2025, Rodriguez and Hill pleaded guilty as part of a deal. A major part of their plea agreement was the forfeiture of 101.213 Bitcoin to the U.S. government. 

According to a report from Bitcoin Magazine, blockchain data suggests that the U.S. Marshals Service later transferred and sold this Bitcoin in late 2025. The Marshals Service is the agency responsible for managing and disposing of assets seized by the Department of Justice. This sale is what critics now claim broke the presidential order to hold such Bitcoin in reserve. 

Southern District Court Sparks New Controversy in Samourai Case

This is not the first time that the Southern District of New York’s handling of the Samourai case has attracted backlash. Earlier in the prosecution, defense lawyers accused the prosecutors of suppressing important evidence. They filed a motion in May 2025 to dismiss the case. 

The motion alleged that prosecutors withheld a 2021 guidance document from the Financial Crimes Enforcement Network, known as FinCEN. This internal document reportedly stated that non-custodial services like Samourai Wallet did not meet the legal definition of a money transmitting business. 

The defense argued this information was important and that its withholding violated their rights. The crypto policy group Coin Center revealed an analysis, where the authority called it a “breakdown in the system,” where prosecutors appeared to ignore guidance from the very agency responsible for anti-money laundering rules. 

Crypto Community Demands Accountability

Frank Corva, a contributor to Bitcoin Magazine and Forbes, shared the story on social media. After this, the crypto community has started demanding accountability. 

Some legal experts suggest that this could lead to an internal review within the Department of Justice or attract attention from Congress. A bill introduced in June 2025, H.R. 3798, is expected to turn the President’s Executive Order into a law, which could prevent such actions in the future. 

The reported sale also questions the integrity of the Strategic Bitcoin Reserve, which is estimated to hold about 210,000 Bitcoin from various forfeitures.

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