Pierluigi Paganini
April 25, 2024
The U.S. Department of Justice (DoJ) has arrested two co-founders of the cryptocurrency mixer Samourai and seized the service. The allegations include claims of facilitating over $2 billion in illicit transactions and laundering more than $100 million in criminal proceeds.
The duo, Keonne Rodriguez (35) and William Lonergan Hill (65), are charged with operating Samourai Wallet, which DoJ states is an unlicensed money-transmitting business.
Keonne Rodriguez was the Chief Executive Officer of Samourai Wallet (“Samourai”), while William Lonergan Hill was the company’s Chief Technology Officer.
“These charges arise from the defendants’ development, marketing, and operation of 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, such as Silk Road and Hydra Market” reads the press release published by the DoJ.
RODRIGUEZ was arrested and is set to appear before a U.S. Magistrate Judge in the Western District of Pennsylvania. HILL was also arrested yesterday in Portugal following U.S. criminal charges. The United States aims to extradite HILL to face trial in the country.
The cryptocurrency mixer operated from about 2015 through February 2024, the DoJ states that both defendants were aware that a substantial portion of the funds that the service processed were criminal proceeds passed through Samourai for purposes of concealment.
“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.” continues the DoJ. “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.”
Rodriguez and Hill implemented features in the platform aimed at aiding individuals involved in criminal activities to obscure the origin of their proceeds. One feature, “Whirlpool,” offers a cryptocurrency mixing service that batches cryptocurrency exchanges among users to hinder law enforcement tracing on the Blockchain. Another feature, “Ricochet,” adds unnecessary intermediate transactions (“hops”) when sending cryptocurrency to obscure its origin.
Both features are aimed at evading detection by law enforcement and making investigations in illicit transactions more difficult.
“Similarly, RODRIGUEZ and HILL possessed and transmitted to potential investors marketing materials that discussed how Samourai’s customer base was intended to include criminals seeking privacy or the subversion of safeguards and reporting requirements by financial institutions.” continues the press release. “For example, in Samourai’s marketing materials, RODRIGUEZ and HILL similarly acknowledge that the individuals most likely to use a service like Samourai include individuals engaged in criminal activities, including “Restricted Markets.”
The DoJ also shared an excerpt from Samourai’s marketing materials showing the founders acknowledging that its revenues will be derived from “Dark/Grey Market participants” seeking to “swap their bitcoins with multiple parties” to avoid detection:
Since the launch of Whirlpool in 2019 and Ricochet in 2017, the mixer processed over 80,000 BTC (equivalent to over $2 billion), generating approximately $3.4 million in fees for Whirlpool transactions and $1.1 million for Ricochet transactions.
The joint operation conducted by US authorities with the help of Europol and law enforcement authorities in Iceland, and Portugal, led to the seizure of Samourai’s web servers and domain (https://samourai.io/). The police also issued a seizure warrant for Samourai’s mobile application on the Google Play Store, the app was removed from the Google Play Store in the United States.
The authorities charged the defendants with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison.
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