U.S. Government’s Stance on Samourai Wallet Founders
The U.S. government has taken a firm stance against the founders of Samourai Wallet, advocating for a maximum prison sentence of five years for both individuals. This action follows allegations that Keonne Rodriguez and William Lonergan Hill deliberately orchestrated a cryptocurrency mixing service intended primarily as a tool for criminals to launder vast sums of illicit funds—estimated to be in the hundreds of millions of dollars.
Details of the Case
Prosecutors from the Southern District of New York outlined their case in a sentencing memorandum submitted on Friday. They claim that Rodriguez and Hill actively solicited and invited criminal users to exploit their platform, portraying themselves not as passive participants but as proactive enablers of illegal activities. The documents reveal that from its inception in 2015 until its closure in April 2024, Samourai was linked to laundering activities totaling at least $237 million.
In a plea deal reached in July, both defendants admitted to conspiracy charges related to running an unlicensed money transmitting operation, acknowledging that their platform facilitated the laundering of proceeds from drug trafficking and cybercrimes. As part of this agreement, three additional serious charges, including conspiracy to launder money and to violate sanctions, were dropped, despite those potentially carrying lengthy sentences of 20 years each.
Sentencing and Evidence
Sentencing hearings for Rodriguez and Hill are set for November 6 and 7, respectively. Prosecutors have characterized the duo’s actions as deliberately designed to attract users engaged in illegal activities, underscoring their marketing strategies which, according to prosecutors, revolved around laundering criminal proceeds.
Evidence presented in court includes a 2018 WhatsApp conversation where Rodriguez referred to cryptocurrency mixing as “money laundering for bitcoin.” Meanwhile, Hill allegedly promoted their service on dark web forums in both 2020 and 2023, suggesting it provided a means to “clean” and obfuscate the origins of Bitcoin.
The collected transaction fees from Samourai totaled over $6.3 million, equal to approximately 246.3 Bitcoin, which has appreciated significantly in value.
Connections to Criminal Activities
The illicit funds funneled through Samourai Wallet have ties to various nefarious sources, including darknet marketplaces like Silk Road and Hydra, infamous cyber heists, sites distributing child sexual abuse material, and even murder-for-hire schemes, as well as connections to sanctioned countries like North Korea, Iran, and Russia.
While the probation office recommended a lesser sentence of 42 months for each defendant, prosecutors assert that a full five-year sentence is warranted, citing the maximum punishment allowable under federal law regarding unlicensed money transmission. This case is emblematic of a wider trend where U.S. authorities have intensified their scrutiny on cryptocurrency mixers.
Broader Implications
In a related scenario, Roman Storm, the developer of another mixer known as Tornado Cash, was recently convicted of similar charges. Although the jury could not reach a consensus on additional money laundering and sanctions evasion charges, the ongoing legal battles resonate with privacy advocates who are increasingly concerned about the implications of prosecuting developers of open-source anonymity tools. The state’s efforts to regulate this digital landscape have raised significant questions regarding the permissibility of creating software that promotes user anonymity in financial transactions.
