Cyber Crime
From Crypto Kings to Criminals: The Downfall of Samourai Wallet’s Founders!
Samourai Wallet founders arrested for facilitating over $2 billion in illegal transactions and laundering $100 million. U.S. authorities seek extradition.
In the operation led by the US Attorney’s Office for the Southern District of New York, Keonne Rodriguez and William Lonergan Hill, the co-founders of cryptocurrency service Samourai Wallet, were arrested on charges of operating an unlicensed money-transmitting business and conspiracy to commit money laundering.
The announcement was made by Damian Williams, U.S. Attorney for the Southern District of New York, alongside officials from the IRS Criminal Investigation and the FBI.
According to authorities, Samourai Wallet facilitated over $2 billion in unlawful cryptocurrency transactions and is alleged to have laundered more than $100 million. These transactions reportedly supported various illegal activities sourced from dark web markets, including Silk Road and Hydra Market, as well as other fraudulent schemes.
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Rodriguez, serving as the CEO of Samourai, was apprehended in Pennsylvania and is slated to appear in federal court shortly. Hill, the CTO, was arrested in Portugal with U.S. authorities now seeking his extradition. Both are accused of deliberately creating and marketing their cryptocurrency mixing services, which obscured the origins of substantial amounts of money, catering largely to criminal enterprises.
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As part of the crackdown, law enforcement also executed a seizure warrant against Samourai’s web servers and domain, while also removing the Samourai mobile application from the Google Play Store, effectively shuttering its operations in the U.S.
The indictment details that from its inception around 2015, Samourai Wallet provided unique features that ensured financial anonymity, significantly hindering the ability of authorities to trace illegal transactions on the blockchain. Services like “Whirlpool” and “Ricochet” offered by Samourai, allowed users to disguise the source and flow of cryptocurrency, a utility openly promoted as catering to individuals involved in illicit activities.
Special Agent in Charge of the IRS-CI New York office, Thomas Fattorusso, highlighted the gravity of the situation by pointing out the sheer volume of transactions processed without oversight through the unlicensed platform. Similarly, FBI Assistant Director in Charge, James Smith, emphasized the role of technology in facilitating such covert financial activities and assured continued efforts to combat cyber-enabled financial crimes.
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The case, which is being handled by the Office’s Complex Frauds and Cybercrime Unit along with the Illicit Finance and Money Laundering Unit, is a stark reminder of the ongoing challenges and complexities in regulating and policing the digital currency space. Assistant U.S. Attorneys Andrew K. Chan and David R. Felton are leading the prosecution, reflecting a coordinated effort across multiple agencies and international borders to address the sophisticated use of technology in criminal endeavors.
Both Rodriguez and Hill face serious charges, with the conspiracy to commit money laundering carrying a potential maximum sentence of 20 years in prison, and the charge of operating an unlicensed money transmitting business carrying up to five years.
As the legal process unfolds, the defendants are presumed innocent until proven guilty. However, this case serves as a critical example of the broader implications and potential risks associated with the misuse of cryptocurrency technologies.