U.S. authorities charged and arrested the founders of Samourai Wallet, a Bitcoin mixer, this week. They were accused of conspiracy to commit money laundering.
William Lonergan Hill and Keonne Rodriguez were charged by the US Attorney’s Office of the Southern District of New York.
The charges
The two were accused of operating a crypto mixer that executed unlawful transactions of more than $2 billion and facilitated money laundering transactions of more than $100 million from illegal dark web markets.
According to the agency, criminals used the platform as a ‘virtual haven’ for exchanging illicit funds. Both Hill and Rodriguez were arrested and Samourai’s web domain and server have been seized.
The Bitcoin mixer’s website now shows a notice saying ‘this website has been seized’. It had previously claimed to have the ability to thwart blockchain-based censorship and surveillance.
James Smith, the FBI Director in Charge, said that technology is used by threat actors to evade detection from law enforcement and they create environments for conducting criminal activity.
The reaction
The indictment said that the defendants offered Samourai as a ‘privacy’ service and were aware that it was a haven for criminals to evade sanctions and conduct money laundering.
It asserted that the defendants were aware that most of the funds processed on Samourai were of a criminal nature and were passed through the platform for concealment.
Fans of the service took to X to lament the law enforcement action, which included Edward Snowden, the exiled US whistleblower.
Snowden said that the Department of Justice was criminalizing the developers of an app that was restoring financial privacy.
He asserted that making money private by default was the only solution and that privacy could become criminal if it were made ‘exceptional’.
ZachXBT, a blockchain tracker, also expressed disappointment, stating that Samourai operates public goods like OXT and also has one of the best BTC tracing educational series on YouTube.
The background
A non-custodial app, Samourai enables users to store their BTC privately. It also functions as a coin mixer, a crypto service that has been deemed controversial.
It is because it obfuscates transactions by combining them, which makes them difficult to trace. Mixers have been targeted by the federal government before as well.
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) banned Tornado Cashback in 2022.
According to OFAC, the Ethereum mixer was being used by criminals for laundering dirty money. They arrested developer Alex Pertsev.
It was also alleged that the co-founders of the app, Roman Semenov and his colleague Roman Storm, had laundered criminal proceeds of more than $1 billion.
This is certainly not the first time that authorities in the United States have taken action against crypto-related apps.
There has been a crackdown against the crypto industry in the country that has seen many crypto businesses sued for their activities.