Co-Founders of Crypto Mixing Service Face Money Laundering Charge Following Arrest

United States prosecutors have alleged that two co-founders developed a crypto mining service called Samourai Wallet that conducted unlawful transactions worth $2 billion.

The co-founders each face charges of money laundering and unlicensed money transmitting Business, with the former carrying a maximum prison sentence of 20 years.

Samourai Wallet Allegedly a ‘Safe Haven’ for Criminals

According to a press release by the U.S. Attorney’s Office of the Southern District of New York, executives of Samourai Wallet CEO Keonne Rodriguez and chief Technology officer William Lonergan Hill, who both double as co-founders, were arrested on April 24, 2024.

Rodriguez was apprehended in the United States, while Hill’s detention happened in Portugal, with the press release stating that the US will seek his extradition.

In addition, authorities seized Samourai’s domain and servers, with the application no longer available for download in the United States, after a seizure warrant was issued on the Google Play Store. Before the seizure, the Samourai mobile app had over 100,000 downloads.

Rodriguez and Hill developed and operated Samourai between 2015 and 2024, which had two features – a cryptocurrency mixer called Whirlpool and a hopping service called Ricochet.

As alleged by prosecutors, both features helped to obfuscate the source of criminal proceeds, serving as a “safe haven” for criminals looking to launder illicit funds. Prosecutors further claimed that the defendants “intended and well knew, a substantial portion of the funds that Samourai processed were criminal proceeds passed through Samourai for purposes of concealment.”

Through Whirlpool and Ricochet, Samourai reportedly executed more than $2 billion worth of unlawful transactions and laundered $100 million in crime proceeds from illegal dark web markets.

Furthermore, Rodriguez and Hill, through tweets and private messages, allegedly “encouraged and openly invited users to launder criminal proceeds” using Samourai. The executives made $4.5 million in fees from Whirlpool and Ricochet, as stated in the press release.

US Authorities Intensify Crackdown on Crypto Mixers

Rodriguez and Hill are each charged with one count of conspiracy to commit money laundering and one count of conspiracy to operate an unlicensed money-transmitting business, with each of the charges carrying a maximum prison sentence of 20 years and five years, respectively.

According to a statement from James Smith, the FBI Assistant Director in Charge:

“Threat actors utilize Technology to evade law enforcement detection and create environments conducive to criminal activity.  For almost 10 years, Keonne Rodriguez and William Hill allegedly operated a mobile Cryptocurrency mixing platform which provided other criminals a virtual haven for the clandestine exchange of illicit funds.”

The US government continues to crackdown on crypto mixers, which is believed to be used by notorious criminal elements such as Lazarus Group, for money laudering.

In March, federal prosecutors scored a victory against Roman Sterlingov, operator of the crypto mixer Bitcoin Fog. Sterlingov was found guilty of charges relating to money laundering.

Other Cryptocurrency mixers such as Tornado Cash and Blender.io were previously sanctioned by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC), with the executives of the former accused of laundering over $1 billion.