The US government is sticking to its guns when it comes to chasing down cryptocurrency mixing tools that shady characters and crafty foreign governments use to hide their money transfers. On Wednesday, federal prosecutors arrested Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill, accusing them of conspiring to launder cash.
According to prosecutors, 35-year-old Rodriguez and 65-year-old Hill raked in approximately $4.5 million for their mixing services. The pair faces allegations of conspiring to launder money and operating an unlicensed money-transmitting business. The maximum penalty for these charges is 20 and 5 years respectively.
The Arrests and Seizures
The long arm of the law has reached wide across and far the USA. Damian Williams, the US Attorney for the Southern District of New York; Thomas Fattorusso, a special agent leading criminal investigations for the New York branch of the IRS-CI; and James Smith, Deputy Director of the New York division of the FBI, announced the unsealing of the indictment.
The charges stem from the development, marketing, and operation of a cryptocurrency mixer that facilitated illegal transactions totaling over $2 billion and contributed to money laundering transactions exceeding $100 million from illicit darknet markets like Silk Road and Hydra Market. They pulled off some serious capers, including server breaches, targeted phishing schemes, and all sorts of fraud schemes with decentralized finance protocols.
Rodriguez was arrested Wednesday morning and is expected to face a US Magistrate Judge in the Western District of Pennsylvania either today or tomorrow. As for Hill, he was nabbed in Portugal on US criminal charges. The United States will seek HILL’s extradition to face trial in the United States.
Working hand-in-hand with Icelandic law enforcement, they even seized Samourai’s web servers and domain. Plus, they served up an arrest warrant to Google Play to take down the Samourai mobile app. That’s curtains for the app in the US — no more downloading Samourai from the Google Play Store here.
Samurai`s Wallet Background
From around 2015 to February 2024, Rodriguez and Hill developed, sold, and operated a cryptocurrency mixing service known as Samourai — a shady money-moving gig that netted them millions in fees. Samourai illegally combined several unique features to facilitate anonymous financial dealings for clients, tallying up over $2 billion in transactions.
Pitching Samourai as a “privacy service,” the accused knew darn well it was a safe haven for big-time money launderers and sanctions evasion. Indeed, as the defendants suspected and were well aware, a hefty chunk of the cash flowing through Samourai came from criminal enterprises, passing through the system for camouflage.
During the relevant period, Samourai laundered over $100 million in ill-gotten gains from various criminal enterprises, among other criminal sources, illegal darknet markets such as Silk Road and Hydra Market. They tried their hand at electronic and computer fraud schemes — a bit of server hacking here, some targeted phishing there, and a dash of decentralized finance trickery for good measure.
The Criminal Chronicles
Rodriguez and Hill developed Samourai to offer at least two functions designed to help individuals engaged in criminal activities hide the source of their ill-gotten gains.
Firstly, Samourai offers a cryptocurrency mixing service called Whirlpool, which coordinates cryptocurrency exchange packets among groups of Samourai users to throw off law enforcement tracking of criminal proceeds on the blockchain.
Secondly, Samourai offers a service called “Ricochet,” allowing users to create additional and unnecessary intermediate transactions (known as “hops”) when sending cryptocurrency from one address to another. This feature can similarly prevent law enforcement or cryptocurrency exchanges from trying to trace certain cryptocurrency batches back to criminal activities.
Samourai cashed in on both services, raking in around $3.4 million for Whirlpool transactions and $1.1 million for Ricochet transactions during the same period.
Rodriguez and Hill operated Twitter accounts that openly encouraged users to use Samourai for laundering criminal proceeds. For instance, in June 2022, a tweet from Rodriguez’s Samourai-managed account hinted at Russian oligarchs trying to skirt sanctions:
According to the press release, the duo sought investors, peddling the same premise: “dark/gray market participants” would be included in their user base.
More Info on Arrests:
- The Trials of Changpeng Zhao: From Crypto Success To 36 Months Imprisonment
- Top Crypto Court Cases to Watch Post-SBF Sentencing
- The U.S. Justice Department Charged Three Individuals For $400M FTX Hack
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