Samourai Wallet founders face prison after guilty plea
Keonne Rodriguez and William, co-founders of the Samourai Wallet coin mixing platform, have pleaded guilty in a United States federal court to charges of operating an unlicensed money transmitting business. They did not plead guilty to several other charges against them, including money laundering.
In April 2024, the U.S. Department of Justice (DOJ) accused Samourai Wallet of facilitating over $2 billion in illegal transactions and laundering more than $100 million in criminal proceeds through its mixing services.
At the time, Samourai's co-developers, Rodriguez and Hill, pleaded not guilty to charges of money laundering, conspiracy to operate an unlicensed money transmitting business, wire fraud, and computer fraud.
However, court documents filed Tuesday in the Southern District of New York indicated that CEO Rodriguez and Chief Technology Officer Hill intended to change their pleas. Sure enough, during a Wednesday morning hearing before Judge Denise Cote, the pair pleaded guilty to the second charge in their indictment, conspiracy to operate an unlicensed money transmitting business.
Rodriguez and Hill will be sentenced in November and face a maximum prison sentence of five years and a $250,000 fine each. They will also still have to contest the other charges, and if convicted on all counts, could be looking at up to 25 years in prison.
Samourai Wallet case
On April 24, 2024, the U.S. Attorney's Office for the Southern District of New York announced the arrests of Rodriguez and Hill over their involvement in the development and operation of the Samourai Wallet mixer.
The indictment alleged Samourai 'executed over $2 billion in unlawful transactions' due to its lack of a money transmitting license as well as its founders' 'deliberate failure to implement' anti-money laundering (AML) and know your customer (KYC) protocols.
Samourai was also accused of facilitating 'more than $100 million in money laundering transactions from illegal dark web markets, such as Silk Road and Hydra Market.' Rodriguez was arrested in the U.S., while Hill was detained in Portugal and later extradited stateside. This was followed by the platform's dot-com domains being seized and Google Play halting downloads of the Samourai app for U.S. users. Meanwhile, with the help of law enforcement agencies in Iceland, Samourai's servers were also seized.
Unlike many coin mixers based on the Ethereum blockchain, Samourai was set up to obfuscate the digital trail of BTC tokens and to keep users' 'identity masked.' Samourai also offered a feature called Ricochet, which added 'extra hops of history to your transaction' and allowed customers to '[s]tump the blacklists and help guard against unjust 3rd party account closures.'
The DOJ claimed such features were actively marketed to criminals and, in one of Rodriguez's court hearings, Judge Cote noted a tweet from Samourai's X account that read 'Welcome new Russian oligarch Samourai Wallet users.'
Other than their ill-advised flaunting of the platforms' legal grey areas, along with seemingly leaning in to the mixer's appeal to questionable groups and individuals—on which a judge and jury is unlikely to look favorably—Rodriguez and Hill's chances of a positive outcome in their federal case took a further hit in March 2024, with the conviction of Roman Sterlingov.
Sterlingov, the Swedish-Russian operator of the Bitcoin Fog mixer, was convicted in a U.S. court on similar charges to those leveled against the Samourai duo, namely money laundering, operating an unlicensed money transmitting business, and violating the District of Columbia Money Transmitters Act.
At the time, U.S. Deputy Attorney General Lisa Monaco said Sterlingov 'thought he could use the shadows of the internet to launder hundreds of millions of dollars in [BTC] without getting caught. But he was wrong… no matter where you operate, if your cryptocurrency service reaches the United States, you must abide by U.S. law.'
Parallels with the Samourai case can also be found in the trial of the Tornado Cash mixer co-founder, Roman Storm, which wrapped up this week. The 34-year-old Russian expat is currently awaiting a verdict on charges of money laundering and facilitating sanctions violations.
With Sterlingov's conviction and guilty pleas now lodged for Rodriguez and Hill for unlicensed money transmitting, if Storm is also found guilty, these cases together will establish a pattern and significant precedent for how privacy-preserving platforms and the open-source developers behind non-custodial software are treated under U.S. law.
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