Samourai Wallet Co-Founders Charged with Laundering Crypto Billions

The arrests of Samourai Wallet co-founders Keonne Rodriguez and William Hill on money laundering charges by the United States Justice Department highlight the increasing crackdown on cryptocurrency mixers. Samourai Wallet is alleged to have facilitated over $2 billion in unlawful transactions, including money laundering for illegal dark web markets. The U.S. government has been targeting mixers due to their role in facilitating illicit activities, with OFAC previously sanctioning Blender.io and Tornado Cash.

Cryptocurrency Mixer Samourai Wallet Co-founders Indicted on Money Laundering Charges

The United States Department of Justice (DOJ), in a coordinated effort with other federal agencies, has arrested the co-founders of the cryptocurrency mixer Samourai Wallet, Keonne Rodriguez and William Hill, on charges of money laundering.

Rodriguez, the CEO, and Hill, the chief technology officer, each face one count of conspiracy to commit money laundering, carrying a maximum sentence of 20 years in prison, and one count of conspiracy to operate an unlicensed money transmitting business, punishable by up to five years in prison.

Rodriguez's arrest occurred on April 24 in Pennsylvania, while Hill was apprehended the same day in Portugal. The DOJ's Southern District of New York office has stated that the United States will pursue Hill's extradition.

Simultaneously, authorities seized Samourai Wallet's servers and domain in Iceland, and a warrant has been issued to halt downloads of the company's app from the Google Play Store, which has been installed over 100,000 times.

The Internal Revenue Service (IRS) and Federal Bureau of Investigation (FBI) also participated in the investigation. According to the DOJ's statement, Samourai Wallet allegedly:

• Processed over $2 billion in illicit transactions, facilitating more than $100 million in money laundering from illicit dark web marketplaces, including Silk Road and Hydra Market.
• Conducted a web-server intrusion, spearphishing scheme, and defrauded multiple decentralized finance protocols.

Samourai Wallet offered the Whirlpool crypto mixing service and Ricochet service, which generated additional, unnecessary transactions to further obfuscate users' cryptocurrency trails. The company allegedly profited $4.5 million from these services.

The U.S. government has intensified its stance against crypto mixers. In May 2022, the Treasury Department's Office of Foreign Asset Control (OFAC) imposed sanctions on Blender.io following the Axie Infinity hack. In October 2022, OFAC added addresses associated with Tornado Cash to its Specially Designated Nationals list, effectively prohibiting U.S. residents from using the service. A court challenge to this decision was unsuccessful, and by August 2023, Tornado Cash's three co-founders were arrested.

In October 2023, the Treasury's Financial Crimes Enforcement Network proposed designating crypto mixers as a "primary money laundering concern" following the Hamas attack on Israel.

The Samourai Wallet case underscores the increasing scrutiny and enforcement actions against cryptocurrency mixers, which are viewed as facilitators of illicit activities and a threat to national security. The government's pursuit of Hill's extradition demonstrates its determination to hold individuals and entities accountable for their alleged involvement in money laundering regardless of their location.