Samourai Wallet mixer co-founders arrested on AML, licensing charges

Two of Samourai Wallet’s co-founders were recently taken into custody by the U.S. Justice Department (DOJ) and other law enforcement groups due to allegations of money laundering.

The CEO of Samourai Wallet, Keonne Rodriguez, and its CTO, William Hill, are charged with conspiring to commit money laundering, carrying a maximum penalty of 20 years in prison per count. Additionally, they face charges for conspiring to run an unlicensed money transmitting business, which carries a maximum sentence of five years in prison per count.

On April 24, Rodriguez was taken into custody in Pennsylvania, USA, while Hill was arrested simultaneously in Portugal. The U.S. Attorney’s Office for the Southern District of New York announced their intention to bring Hill back to America. Icelandic authorities have seized the company’s servers and domain, and a restraining order has been issued through Google Play Store to prevent further downloads of the app, which has been downloaded over 100,000 times.

Samourai Wallet mixer co-founders arrested on AML, licensing charges

The Internal Revenue Service and Federal Bureau of Investigation in the United States were involved in the probe as well. This is based on a declaration from the Department of Justice. Specifically, the Samourai Wallet was under investigation.

“Executed over $2 billion in unlawful transactions and facilitated more than $100 million in money laundering transactions from illegal dark web markets, such as Silk Road and Hydra Market; a web-server intrusion; a spearphishing scheme; and schemes to defraud multiple decentralized finance protocols.”

Samurai Wallet provided two services, Whirlpool and Ricochet, that generated extra, unwanted transactions to complicate users’ cryptocurrency trails. It is claimed they earned approximately $4.5 million in fees through these offerings. (Paraphrased)

Samourai Wallet mixer co-founders arrested on AML, licensing charges

The US government has grown more hostile towards crypto mixing services, such as and Tornado Cash. In May 2022, the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on following the Axie Infinity hack. This led to OFAC adding associated addresses of the Tornado Cash mixer to its list of Specially Designated Nationals in October 2022, thereby prohibiting US citizens from using the service. This decision withstood a legal challenge. By August 2023, the three founders of Tornado Cash had been arrested.

In October 2023, the Financial Crimes Enforcement Network of the US Treasury Department suggested labeling crypto mixers as a major money laundering threat following the Hamas attack against Israel.

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2024-04-25 00:22