Regulatory crackdown on coin mixing services continues! Samourai Wallet founder accused of money laundering by the US Department of Justice

The press release released by the U.S. Department of Justice (DOJ) yesterday revealed that Keonne Rodriguez, CEO of Samourai Wallet, and William Hill, CTO, were arrested on charges of money laundering and operating an unregistered money transmitting service, with an alleged amount involved of $2 billion. Currently, their website and app have been seized.

Samourai Wallet Founder Arrested on Money Laundering Charges

A statement reveals that the CEO Rodriguez and CTO Hill of Samourai Wallet, a privacy-focused cryptocurrency service, have been arrested in the United States and Portugal on charges of money laundering and operating an unlicensed money transmission business:

Since its development, marketing, and operation by the two individuals in 2015, Samourai has been involved in approximately $2 billion in illegal transactions and $100 million in dark web money laundering.

It is also noted that "they are also suspected of multiple criminal cases including server intrusion and phishing scams."

It is understood that Samourai Wallet provides users with a more private way to obfuscate the flow of funds through the Whirlpool and Ricochet protocols, collecting up to $4.5 million in fees.

Both individuals are facing charges of conspiracy to commit money laundering and operating an unlicensed money transmission business, which could carry sentences of up to 20 years and 5 years in prison, respectively.

"Anti-Censorship" Stance Draws Attention?

In a joint statement, the Department of Justice, IRS, and FBI commented:

Rodriguez and Hill, under the banner of "anti-censorship," aided in money laundering activities related to the dark web platforms Silk Road, Hydra Market, and other hacker scams, generating proceeds exceeding $100 million.

Currently, the company's servers and domain name have been seized. The mobile app, downloaded over 100,000 times, has been removed from the Google Play Store.

Mixing Services Under Regulatory Pressure

As the Samourai Wallet case concludes with the arrests, the trial of the mixing protocol Tornado Cash is ongoing. Co-founder Roman Storm, facing multiple charges by the Department of Justice, recently responded through his lawyer, stating that all accusations are severely flawed and requesting their dismissal.

Tornado Developer Roman Storm Advocates "Code Writing Freedom," Seeks Dismissal of Charges by U.S. DOJ

With the U.S. government taking a tougher stance on enforcing regulations on crypto mixing services, privacy protocols are facing increased regulatory pressure. Amidst the growing concerns, even teams initially supportive are now avoiding involvement to prevent any entanglement.

Previously, the Office of Foreign Assets Control (OFAC) of the Treasury Department imposed sanctions on the mixing protocol Blender.io in May 2022 and subsequently listed Tornado Cash for sanctions.

Just last month, the Department of Justice successfully secured money laundering charges against Roman Sterlingov, the operator of another mixing protocol, Bitcoin Fog.

Founder of Bitcoin Fog Mixing Protocol Convicted of Money Laundering, Will Tornado Cash Face Similar Charges?