The U.S. Department of Justice has charged Keonne Rodriguez and William Lonergan Hill, the founders of Samourai Wallet, with operating an unlicensed money-transmitting business. In their filing on April 2024 with the Southern District of New York, the regulators claim that the pair used their platform to facilitate anonymous transactions and laundered $100 million in illicit funds.
Samourai Wallet was introduced to the crypto world in 2015 as a Bitcoin wallet. Using the Samourai app, users can store their private keys for any BTC address. Labeled as a cryptocurrency mixer, it processed billions in transactions without any regulatory oversight. The service allowed users to obscure the sources of their cryptocurrency, drawing in funds linked to dark web markets and various cybercrimes.
Per U.S. Attorney Damian Williams, the pair is “responsible” for creating and operating the mixing service and processing “2 billion in unlawful transactions.” He stressed that Samourai operated as a “haven for criminals” to execute large-scale money laundering operations.
Rodriguez and Hill allegedly knowingly facilitated the laundering of over $100 million of criminal proceeds from the Silk Road, Hydra Market, and a host of other computer hacking and fraud campaigns,” the attorney added.
The crackdown was the result of a multinational collaboration among law enforcement agencies. Special agents from the IRS and the FBI have been integral in tracing these illegal financial flows. It led to the seizure of Samourai Wallet’s web servers and the disabling of its mobile applications. As per the data, the Samourai app has been downloaded over 100,000 times. In response to the current allegations, the Samourai wallet app has been removed from Google’s Play store.
Rodriguez, the CEO of the operation, was taken into custody in Pennsylvania. Meanwhile, Hill, the CTO, was apprehended in Portugal.
Despite the operational shutdown, Samourai Wallet’s non-custodial nature ensures that the 10,899.72 BTC (approximately $700 million) held by the service remains with the users. This encapsulates a combined collection of both cycled and pre-mixed coins in the Whirlpool system.
The news of the founders’ arrest has negatively impacted the cryptocurrency market. Shortly after the DOJ’s announcement, Bitcoin’s price dropped by 3.6%, falling to $63,710 before a minor recovery. Ethereum also declined by 2.51% and continued its downward trend.
This isn’t the only instance of cryptocurrencies leveraged money laundering in recent months. Earlier in March, cryptocurrency exchange BKEX Global suspended withdrawals after user funds were suspected to be used in money laundering.
