The US Department of Justice (DOJ) has charged the founders of crypto-mixing service, Samourai Wallet, with money laundering and unlicensed money transmitting offences in the US. The DOJ alleges that Keonne Rodriguez and William Lonergan Hill, as Samourai’s CEO and CTO, were responsible for the "development, marketing, and operation" of the mixer since about 2015. It is alleged that Samurai Wallet operated as an unlicensed money transmitting business, obfuscating the sources of customer funds through two key services, namely the ‘Whirlpool’ (mixing) service and ‘Ricochet’ (adding unnecessary intermediary transactions or ‘hops’ in the main transaction) service.
In a press release, US Attorney Damian Williams alleged:
Samourai…executed over $2 billion in unlawful transactions and served as a haven for criminals to engage in large-scale money laundering. Rodriguez and Hill allegedly knowingly facilitated the laundering of over $100 million of criminal proceeds.
The pair were arrested on Wednesday, with Hill’s extradition from Portugal pending approval. They will face trial in the US with the District Judge Richard Berman hearing the case. In the meantime, Samourai’s website and domain were seized in a joint effort with law enforcement powers in Iceland and a seizure warrant has been served on Google’s Play Store, restricting access to the Samourai mobile application in the US.
Williams highlighted the US regulators' heightened language of vigilance and crime towards the use of cryptocurrency:
Together with our law enforcement partners, we will continue to relentlessly pursue and dismantle criminal organizations that use cryptocurrency to hide illicit conduct.
The latest indictments follow the recent conviction of Roman Sterlingov, the founder of the crypto mixer Bitcoin Fog, on four charges involving money laundering. Three developers who allegedly created and operated the Tornado Cash protocol are currently being prosecuted in the Netherlands and the United States on anti-money laundering and sanctions violations.
The US authorities controversial sanctioning of Tornado Cash now appears to be part of a broader crack-down on privacy tech and crypto mixing services. A key issue in these cases concerns the extent of the alleged accused's involvement in the development and ongoing operation of the software and whether the software itself could be infringing the laws in question, with many crypto lawyers suggesting it cannot as it is merely self executing code.
By Michael Bacina, Kelly Kim and Steven Pettigrove