In a significant operation, US federal authorities arrested Keonne Rodriguez and William Lonergan Hill, the founders of Samourai Wallet, on charges of money laundering through a Bitcoin mixing service.
The indictment, filed by the U.S. Attorney's Office for the Southern District of New York, alleges that the service they operated was responsible for handling more than US$2 billion in illicit transactions, including more than US$100 million from illegal activities on the dark web.
The Samourai platform, known for promoting the privacy of its transactions, is described by authorities as a “virtual haven” for criminals interested in hiding illicit funds. With the arrest of the co-founders and the seizure of the server and web domain, the Samourai website now displays a confiscation message.
Unfortunate to see as they have one of the best BTC tracing educational series on YouTube + operate public goods such as OXT
— ZachXBT (@zachxbt) April 24, 2024
The cryptocurrency mixer is a tool that seeks to obfuscate the origin and destination of transactions, making tracking by regulatory entities more challenging. “Threat actors use technology to evade law enforcement detection and create environments ripe for criminal activity,” said James Smith, assistant director of the FBI.
The indictments detail that while the defendants promoted Samourai as a “privacy” service, they were aware of its predominant use for large-scale money laundering and sanctions evasion. “In fact, as the defendants intended and well knew, a substantial portion of the funds that Samourai processed were criminal proceeds passed by Samourai for purposes of concealment,” the charging document clarifies.
The reaction to the arrest did not take long to emerge. Edward Snowden, the exiled US whistleblower, criticized the Justice Department's action via Twitter, arguing that financial privacy should be a standard, not an exception. Other users lamented the loss of a service that, in addition to promoting privacy, offered educational resources about Bitcoin tracking.
The precedent for similar actions was set in 2022, when Tornado Cash, another mixing service, was banned by the US Treasury Department over allegations it was a tool for laundering dirty money.
