Federal prosecutors have accused the founders of Samourai Wallet, Keonne Rodriguez and William Lonergan Hill of conspiracy to commit money laundering and operating of an unlicensed money transmitting business.
According to the Department of Justice, their cryptocurrency mixing service processed over $2 billion in illegal transactions and enabled several money launderings but notably the laundering of $100 million earned from dark web markets.
Rodriguez, the CEO of Samourai, was taken into custody in Pennsylvania, while Hill, the CTO, was caught in Portugal. Both are charged with very serious offenses, the conspiracy to commit money laundering charge carries a possible maximum sentence of 20 years in prison, and the charge of operating an unlicensed money transmitting business carries up to five years.
According to the indictment revealed today in Manhattan federal court, from 2015, Rodriguez and Hill developed Samourai Wallet, a service that allegedly provides improved privacy for cryptocurrency transactions.
Nonetheless, the DOJ argues that this service was a cover-up for an elaborate system of large scale money laundry. Their services Whirlpool and Ricochet are assumed to have controlled transactions that would have helped to conceal the source of illegally earned money.
Over the years, more than 80,000 BTC passed through these services, amassing fees totaling approximately $4.5 million. The purported illegal activities involve laundering money from dark web market places such as Silk Road and Hydra Market, as well as other fraud schemes.
U.S. Attorney Damian Williams underscored the seriousness of the allegations, saying that Samourai was a sanctuary for criminals to carry out large-scale money laundering and sanctions evasion. The indictment brings to light the active promotion of Samourai by Rodriguez and Hill for laundering the illegal proceeds, which is indicated through a number of communications that include tweets and private messages.
The cooperation of different jurisdictions in the arrest has been highly appreciated by law enforcement agencies such as the IRS Criminal Investigation and the FBI. The IRS pointed to the vast sums of money that passed through Samourai without control, focusing on the lack of regulatory compliance of the operators.
The case targeted at Samourai Wallet is a part of the larger initiative to fight against that crypto space. The DOJ has demonstrated increased determination of addressing crypto related offenses, after having taken similar actions against other cryptocurrency mixing services. The arrest is a major development in the regulatory measures aimed at making cryptocurrency platforms compliant with anti-money laundering laws and to prevent them from becoming transfer points of financial crime. Concurrently, Samurai’s website and mobile application have been seized.
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