Key Developments
- •Prosecutors state Samourai's Whirlpool and Ricochet tools were designed to conceal Bitcoin transactions, processing approximately 80,000 BTC in a manner that circumvented security measures.
- •William Lonergan Hill and Keonne Rodriguez promoted the mixing service for illicit purposes and accumulated over $6 million in fees before pleading guilty to lesser charges.
- •Internal communications revealed that the founders were aware of criminal usage, with Rodriguez referring to mixing as "money laundering for bitcoin."
Sentencing and Penalties
William Lonergan Hill, the Chief Technology Officer and Co-Founder of the cryptocurrency mixing service Samourai Wallet, has received a four-year federal prison sentence. The sentence was handed down by a federal judge in New York, who emphasized that Hill's actions significantly hindered the recovery of stolen funds by victims of various crimes, including hacks and fraud schemes.
Hill had previously pleaded guilty to conspiring to operate an unlicensed money-transmitting business. According to prosecutors, Samourai Wallet was developed to obscure Bitcoin (BTC) movements, deliberately bypassing established financial safeguards.
This four-year sentence follows the sentencing of Keonne Rodriguez, CEO and Co-Founder of Samourai Wallet, who received a five-year federal prison term on November 6. Both individuals are also required to serve three years of supervised release and pay $250,000 each in fines. Additionally, they have forfeited over $6.3 million, representing the fees Samourai collected, as part of a larger forfeiture order linked to the criminal proceeds processed through the platform.
Tools Designed to Obscure Bitcoin Transactions
Prosecutors detailed that Samourai Wallet was engineered to obscure Bitcoin transfers and evade financial safeguards, thereby complicating efforts by law enforcement and exchanges to trace suspicious transactions.
The service employed two primary features to achieve this. "Whirlpool," introduced in 2019, mixed Bitcoin among groups of users, effectively obscuring the original source of the coins on the blockchain.
A second tool, "Ricochet," incorporated additional, non-essential steps into a transaction to disrupt the link between the sender and receiver. Collectively, these features handled over 80,000 BTC, valued at more than $2 billion at the time, and generated in excess of $6 million in fees.
Evidence of Encouraging Criminal Activity
Investigators presented evidence, including messages and online posts, indicating that Hill and Rodriguez actively promoted the service for criminal use. Hill, for instance, advertised Samourai’s Whirlpool tool on the darknet forum Dread, recommending it as a superior option for users seeking to "clean dirty BTC."
In 2020, Rodriguez encouraged hackers responsible for a significant social media breach to route their stolen funds through the mixer, expressing disappointment when they opted for an alternative service.
Internal communications confirmed that the Co-Founders were fully aware of how Samourai was being utilized. In one instance, Rodriguez described the mixing process as "money laundering for bitcoin" in a WhatsApp exchange. Furthermore, Samourai's marketing materials acknowledged that a portion of its user base comprised participants from dark markets who were moving illegal proceeds.
The investigation involved collaborative efforts from the Internal Revenue Service (IRS), the Federal Bureau of Investigation (FBI), Europol, Icelandic authorities, and Portuguese law enforcement. These agencies were instrumental in securing Hill’s extradition from Portugal in 2024.
This case has garnered considerable attention within the cryptocurrency community, raising critical questions regarding privacy-enhancing tools. Prosecutors maintain that any service intentionally designed to facilitate the concealment of criminal funds is inherently illegal, irrespective of the underlying technology.
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