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

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The co-founders of cryptocurrency mixer Samourai Wallet have been arrested on charges of money laundering brought by the United States Justice Department (DOJ) and other agencies. 

Samourai Wallet CEO Keonne Rodriguez and chief technology officer William Hill will each face one count of conspiracy to commit money laundering, with a maximum sentence of 20 years in prison, and one count of conspiracy to operate an unlicensed money transmitting business, with a maximum sentence of five years in prison.

Rodriguez was arrested on the morning of April 24 in Pennsylvania, and Hill was arrested the same day in Portugal. According to a statement released by the U.S. Attorney’s Office of the Southern District of New York, the United States will seek Hill’s extradition. The company’s servers and domain were also seized in Iceland, and a warrant has been served to stop downloads of the company’s app from the Google Play Store. The app has been downloaded more than 100,000 times.

Screenshot of the Samourai Wallet homepage. Source: doj.gov

The U.S. Internal Revenue Service and Federal Bureau of Investigation also took part in the investigation. According to the DOJ statement, Samourai Wallet:

“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.”

Samourai Wallet offered its Whirlpool crypto mixing service and Ricochet service, which created additional, unnecessary transactions to further muddy users’ crypto paths. They allegedly made $4.5 million from fees.

Related: Arbitrum DAO votes on $1M fund for Tornado Cash devs’ legal defense

Source: Bitfinex

The U.S. government has become increasingly aggressive toward crypto mixers. The Treasury Department’s Office of Foreign Asset Control (OFAC) sanctioned Blender.io in May 2022 after the Axie Infinity hack. OFAC added addresses associated with the Tornado Cash mixer to its list of Specially Designated Nationals in October 2022, effectively banning U.S. residents from using the service. That decision survived a court challenge. The three co-founders of Tornado Cash were all under arrest by August 2023.

In October 2023, the Treasury’s Financial Crimes Enforcement Network proposed designating crypto mixers as a “primary money laundering concern” after the Hamas attack on Israel.

Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers