US Prosecutors Seek Maximum Sentence for Samourai Wallet Developers

The US government is seeking a maximum statutory prison sentence of five years for the two founders of Samourai Wallet, alleging that they deliberately built and ​​marketed a crypto-mixing service as a haven for criminals to launder hundreds of millions of dollars in ill-gotten gains.

In a memorandum of judgment archived On Friday at the US Attorney’s Office for the Southern District of New York, prosecutors said that Keonne Rodriguez and William Lonergan Hill “repeatedly solicited, encouraged and invited criminals” to use their platform to conceal illicit funds.

The case is one of the government’s most aggressive prosecutions of crypto developers to date.

Between 2015 and April 2024, when authorities shut down the service, the government identified at least $237 million in criminal proceeds laundered through Samourai, according to the filing.

Rodriguez and Hill he pleaded guilty in July to conspiracy to operate an unlicensed money transmission business involving funds known to be derived from criminal activity, admitting that the criminals used Samourai to launder drug trafficking and hacking.

In exchange, prosecutors dropped three more serious charges: conspiracy to commit money laundering, conspiracy to commit sanctions violations, and federal license violations, each of the first two carrying potential sentences of 20 years.

Rodriguez’s sentencing is scheduled for Nov. 6 at 11:00 a.m. ET, with Hill the following day.

Prosecutors say the couple actively wooed illicit users, calling them “not mere passers-by,” and claim they traded Samourai for the lake.

The government’s filing cites a 2018 WhatsApp chat in which Rodriguez called mixing “money laundering for bitcoin”. In 2020 and 2023, Hill allegedly promoted Samourai on dark web forums, claiming it would “clean up dirty Bitcoin” and make it “untraceable”.

The defendants collected more than $6.3 million in fees from Samourai’s transactions, about 246.3 BTC, worth about $26.9 million today because of Bitcoin’s appreciation, for the file.

Criminal proceeds traced through Samourai originate from darknet markets, including Silk Road and Hydra, multiple crypto exchange hacks, child sexual abuse material distribution sites, murder-for-hire plots, and sanctioned entities in Iran, Russia, and North Korea, the filing reads.

The probation office recommended 42 months for each defendant, but prosecutors are seeking the full five years, the maximum allowed under 18 USC § 371, which covers conspiracy to operate an unlicensed money transmission business.

The case overshadows similar cases in which prosecutors and officials have targeted mixers through sanctions and regulatory pressure.

In August, the developer of Tornado Cash Roman Storm was convicted of conspiracy for operating an unlicensed money transmitter, although jurors deadlocked on money laundering and sanctions evasion charges, potentially setting up a new trial on those counts.

The United States Department of the Treasury sanctioned the mixer in August 2022, stated that $ 7 billion had been laundered through the protocol since 2019, with frequent use by hackers of the Lazarus Group of North Korea.

Although these sanctions were later deemed illegal and got upcriminal cases against the two crypto mixer developers went ahead, raising concerns among privacy advocates over whether building open-source anonymity tools constitutes criminal conduct in itself.