Feds Arrest Founders of Bitcoin Mixer Samourai Wallet

U.S. authorities on Wednesday arrested and charged the founders of Bitcoin mixer Samourai Wallet, accusing them of conspiracy to commit money laundering.

The U.S. Attorney’s Office of the Southern District of New York said that Keonne Rodriguez and William Lonergan Hill were charged with operating “a cryptocurrency mixer that executed over $2 billion in unlawful transactions and facilitated more than $100 million in money laundering transactions from illegal dark web markets.”

The agency asserts that their platform gave criminals a “virtual haven” to exchange illicit funds. 

Both Rodriguez and Hill have been arrested and Samourai’s server and web domain have been seized. The website—which now features a “this website has been seized” notice—had touted the ability of the service to “thwart blockchain-based surveillance and censorship.”

“Threat actors utilize technology to evade law enforcement detection and create environments conducive to criminal activity,” said FBI Assistant Director in Charge James Smith said in the statement.

“While offering Samourai as a ‘privacy’ service, the defendants knew that it was a haven for criminals to engage in large-scale money laundering and sanctions evasion,” details the indictment. ”Indeed, as the defendants intended and well knew, a substantial portion of the funds that Samourai processed were criminal proceeds passed through Samourai for purposes of concealment.”

Samourai did not respond to a request for comment from Decrypt. Fans of the service lamented the law enforcement action on Twitter, including exiled U.S. whistleblower Edward Snowden.

“The Department of ‘Justice’ has once again criminalized the developers of an app that restores financial privacy,” Snowden wrote. “The way to fix this it to make money private by default. Privacy must never be ‘exceptional,’ or they will make it criminal.”

”Unfortunate to see as they have one of the best BTC tracing educational series on YouTube [and] operate public goods such as OXT,” wrote blockchain tracker @ZackXBT.

Samourai is a non-custodial app that allows users to store Bitcoin privately. It is also a coin mixer, a controversial crypto service that obfuscates transactions by combining them, making movements harder to trace. 

The federal government has targeted mixers before: in 2022, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) banned Americans from using Tornado Cash, an Ethereum mixer, claiming that criminals had used it to launder dirty money. 

They then alleged that the app’s co-founders, Roman Storm and his colleague Roman Semenov, laundered more than $1 billion in criminal proceeds. Developer Alex Pertsev was also arrested. 

This is a breaking news story and will be updated. 

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