11/15/22 Crypto6 Evidentiary Hearing
After almost 7 years of waiting we’ve finally got a trial date! So mark your calendar and put your employer on notice that you’ll need a few weeks off as there is finally a solid date for the trial: December 6th, 2022. Address: U.S. District Court, 55 Pleasant St, Concord, NH 03301. Time yet to be known. Bring a valid state issued ID (real ID and passport not required) to ensure entrance to court house, no cameras/phones.
For those who haven’t been paying attention and wondering what the Crypto6 case is all about here is a bit of the backstory. In March of 2021 56 FBI agents, half a dozen three letter agencies, and dozens of other law enforcement officials raided the Bitcoin Embassy, the Shire Free Church, Free Talk Live’s studio, a half dozen homes of so-called co-conspirators among other locations over the bastardly crime of selling crypto.
Somewhat closer to reality the story actually dates back decades and surrounds a single FBI agent with a political grudge against libertarians, free staters, and the Free State Project’s libertarian migration to New Hampshire. To shorten the backstory a bit further after a decade of attempting to take Ian Freeman out and three FBI investigations later FBI agent Phil Christiana finally thinks he has a case he can make stick against his primary political opponent Ian Freeman. You see Ian Freeman is a significant figure in libertarian circles and was responsible for many early movers partaking in the Free State Project’s migration. Some would even credit him with the success of the Free State Project itself. Ian’s activism in New Hampshire dates back about ~16 years now and has been a thorn in the side of Phil Christiana and the federal government for nearly as long. With a majorly syndicated libertarian run radio show Ian has enabled public criticism of government, government agencies, and officials with a show called Free Talk Live broadcasting on about ~200 radio stations nationwide. During this time Ian & co-hosts have promoted the Free State Project and cryptocurrency as a path to peace and freedom. Something dirty agents just don’t like.
The most recent hearing was significant in deciding many issues. The hearing started with a ‘daubert motion’ which is a motion discussed outside the presence of a jury to exclude the testimony of expert witnesses that do not possess the requisite level of expertise or otherwise used questionable methods to obtain data. In this case one of the defendant’s objectives was to exclude an expert that headed the blockchain forensics unit of the FBI and claimed to be an expert on blockchain analysis.
The prosecution granted Ian Freeman’s lawyer Mark Sisti a pre-hearing interview with the prosecution’s blockchain expert and key witness in the case Erin Montgomery. In that interview it came to light that Erin Montgomery has never been qualified as an expert witness before any court. Mark Sisti proceeded to argue that blockchain analysis was not a scientifically validated process sufficient to pass muster at trial. While it has been utilized in other cases to obtain search warrants and the like the standards for use at trial are far greater. In order to utilize blockchain analysis at trial the tools and processes would need to be open to peer review and the results be duplicable by outside experts.
One question that the defenses lawyer raised was whether or not the prosecutors filings constituted a community of experts. For which the prosecutor responded that she was an expert on co-spend. Co-spend is the tracing of the flow of bitcoins via clustering by co-spending which looks at addresses that create a transaction controlled by a given wallet. Effectively the testimony would attempt to prove the different Bitcoin addresses were controlled by the same person or entity.
The defense further clarified that the problem with letting the witness on the stand to testify was that it would give an aura or the appearance that the witness was an expert. To which the judge said he was also not even sure the witness was an expert witness either. As such he was inclined to allow the witness to offer an opinion, but only for story telling sake.
The prosecution proceeded to clarify that it was more about co-spend, not her being an expert.
Mark, the defense lawyer, then got concerned about qualifying her as a witness if not an expert implying that there were different standards of evidence for witnesses than expert witnesses.
Erin Montgomery was then asked to take the stand and testify about her qualifications. She stated that she worked for the FBI in a supervisory role within the virtual asset unit providing expert support. Her expertise covered crypto and decentralized virtual assets. Her qualifications included a liberal arts and history degree and 15 years of service with the FBI. She worked for the FBI’s cyber division unit which was a unit that focused on financially motivated cyber crime.
What makes her qualified to speak as an expert witness included:
– Early on she educated herself using online forums
– As books became available she read up further on Bitcoin
In 2011 Erin Montgomery was one of two people who took “ownership” in the FBI’s first big push into cryptocurrency. From the beginning she was part of a criminal investigation unit that created the virtual asset unit.
She then proceeded to specialize in doing blockchain tracing using open source tools and later commercial tools. She obtained two certificates from a company called Chainalysis which produces a commercial blockchain tracing tool.
She eventually became the supervisor of strategic and tactical groups developing the FBI’s curriculum for blockchain analysis. Despite claiming to have trained hundreds even thousands of people at the FBI she revealed that there were actually only four employees in her unit.
The defendant’s lawyer further questioned the agents credibility pointing out that she had no college education in blockchain analysis from A&M or taken any courses on blockchain analysis. In fact her education pre-dates Bitcoin’s existence. He points out that she never testified as an expert in any courtroom. The Chainalysis tool relied upon was developed by a private company and unavailable for peer review. He asks what the training requirements were for her field. To which she responded that there were no training requirements. Rather the program was developed in house and not peer reviewed by any outside agency at all. There was no scientific basis either. However her work was at points double checked by team-mates.
When her work was questioned, she said that while the evidence was originally crafted by the way of a commercial tool she re-created her work utilizing open source software blockchain.info. Humorously this is not an open source program, but rather a website. Within the context of the questioning the lawyer was not asking about “open source tools”, but the ability of outsider expertise to analyze the source code. This so-called expert didn’t even understand the question let alone that the software she was referring was not open source, but rather merely a website open to the public.
When questioned about her colleague double checking her work she responded that errors had been found, but that she couldn’t remember if any errors were found in this particular case. As the testimony continued the blockchain expert gleaned at the prosecutor gesturing for confirmation of her testimony. A regular back and forth of this continued throughout the testimony. Upon follow up questioning by the prosecutor the witness reveals that it’s very easy to make mistakes. In giving an example of a mistake shes made before she humorously even made an unintentional error confusing Bitcoin addresses and amounts thereof.
The defense asks what makes you special, to which the expert witness responds that she doesn’t know that anything makes her special. This is an embarrassing blunder given she indicates that even the defense lawyer could reproduce her work using the same websites she utilized. Obviously- if anyone can do it then one is not an expert.
She testifies that co-spend can link different Bitcoin addresses to a single individual yet fails to grasp that multiple people can control a single private key. While it may generally be correct that one controls a wallet by way of a private key there is nothing that says more than one individual or entity can’t control a private key or wallet.
During the hearing the defense lawyer questions whether or not all work has been provided to the defense team. To which the judge is very concerned. He states he does not want a repeat of the ‘Enron situation’ which was a case where not all the evidence that the defense was entitled to was provided by the prosecution which is required by law for a fair trial to occur. Particularly important is evidence favorable to the defense. He concludes that not all evidence favorable to the defense appears to have been turned over based on the expert witnesses testimony.
The defense reveals that there will be a number of witnesses thus far unknown introduced. One piece of evidence introduced to the docket thus far was a legal opinion from a lawyer advising the Shire Free Church on how to operate and vend cryptocurrency without falling afoul of the registration requirements at the federal level and state level. The prosecutor previously attempted to have this letter excluded from trial by falsely claiming the letter was referencing state law only. While that effort may have failed it is now revealed that not only will the letter be introduced at trial, but so will the attorney that drafted it. Thus removing any question of its authenticity.
The defense will also subpoena New Hampshire’s banking commissioner of whom testified at a state house hearing. The hearing was focused on removing the authority of the banking department to regulate cryptocurrency businesses in New Hampshire. It had previously been granted this authority by accident and had never actually regulated cryptocurrency businesses in the state. The witness will testify to the fact New Hampshire did not regulate the very type of vending the Shire Free Church did. In fact, her example during the state house hearing was specific to the Shire Free Church’s operations and the bill proposed was in direct response to legislators and supporters wanting to protect the Shire Free Church and similarly operated vending operations in New Hampshire.
During the hearing it was also revealed that a key piece of evidence intended to prove a ‘knowingly’ aspect of one of the charges wasn’t directed at the Shire Free Church or Ian Freeman. Nor was this letter sent by certified mail or even the postal service. The letter was sent to numerous operators via email and resembled something akin to spam or a fraud.
One of the defenses arguments appears to be that the vending machines were open and notoriously operated for many years.
There will be no jury nullification argument allowed at trial. This however was never an aspect of the defenses argument, but rather created by the imagination of a prosecutor who is aware of Ian Freeman’s jury nullification outreach. That outreach pertains largely to state courthouses and it’s well known that the federal courts will not entertain such argumentation.
The following evidence will be permitted:
1. Owned and operated vending machines
2. NH stated the church need not be registered under state law
3. Attorney Seth Hipple’s testimony on legalities of vending
4. General intent vs specific intent, intent to cause a particular result is not a defense to federal law
Crimes with general intent involve knowingly committing a criminal act. Specific intent crimes involve knowingly committing the criminal act as well as an intent to cause a particular result by committing the act.
5. The non-expert witness / FBI agent testimony will be allowed, but will not be able to give an opinion that it was Ian Freeman’s wallet, but will allow that inference
It was also revealed that the trial will likely take about two weeks to conclude, and will start on December 6th. However while the trial will start immediately it is likely that the first day of the trial will likely primarily constitute jury selection.