Federal prosecutors have charged Keonne Rodriguez and William Lonergan Hill, founders of the privacy-focused Bitcoin wallet and mixer Samourai Wallet, with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business.
The charges, announced by the U.S. Department of Justice (DOJ) on Wednesday, follow an extensive investigation into the pair’s activities and the operations of Samourai Wallet.
TLDR
- Federal prosecutors charged Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business.
- Samourai Wallet allegedly facilitated more than $100 million in money laundering transactions from illegal dark web markets and over $2 billion in unlawful transactions between 2015 and the present.
- Rodriguez and Hill collected approximately $4.5 million in fees for their mixing services and marketed the wallet to “dark/grey market participants.”
- The Samourai Wallet website has been seized, and a seizure warrant was issued for the mobile application on the Google Play Store.
- Following the announcement of the arrests, Bitcoin, Ether, and major altcoins briefly tumbled, with Bitcoin dropping 3.6% and Ether declining 2.51%.
According to the DOJ, Samourai Wallet allegedly facilitated more than $100 million in money laundering transactions from illegal dark web markets and over $2 billion in unlawful transactions between 2015 and the present.
The $2 billion figure was calculated by converting the value of bitcoin laundered through the platform to U.S. dollars based on the cryptocurrency’s price at the time of each transaction.
Prosecutors allege that Rodriguez, 35, and Hill, 65, collected approximately $4.5 million in fees for their mixing services. The pair is accused of developing, marketing, and operating the mixer, which provided a platform for criminals to engage in large-scale money laundering.
The charges carry a maximum sentence of 20 years for conspiracy to commit money laundering and five years for conspiracy to operate an unlicensed money transmitting business.
The DOJ’s press release cited tweets and private messages in which Rodriguez and Hill allegedly encouraged and openly invited users to launder criminal proceeds through the mixer.
The pair also reportedly sought investors by marketing the premise that “dark/grey market participants” would be included in their user base, with a screenshot from marketing materials listing “Restricted Markets” as a target demographic alongside online gambling and asset protection.
As part of the coordinated effort by law enforcement agencies, Rodriguez was arrested on Wednesday morning in Pennsylvania, while Hill, Samourai Wallet’s CTO, was apprehended in Portugal.
The United States plans to seek Hill’s extradition to stand trial in the country. The Samourai Wallet website, which was hosted in Iceland, has been seized, and a seizure warrant was issued for the mobile application on the Google Play Store.
The news of the arrests sent shockwaves through the cryptocurrency market, with Bitcoin, Ether, and major altcoins briefly tumbling in the aftermath of the announcement.
Within an hour of the DOJ’s press release, Bitcoin’s price dropped 3.6%, dipping below key support levels to $63,710 before recovering slightly to $64,546. Ether, the second-largest cryptocurrency by market capitalization, dropped 2.51% within the same time frame and continued to decline further to $3,158.
The sharp price drops in the top two cryptocurrencies triggered widespread liquidation of long positions, with Bitcoin seeing $33.08 million worth of long positions liquidated and Ether experiencing $29.88 million in liquidations over a 12-hour period.
Approximately $23 million in long positions were liquidated across the rest of the crypto market, according to CoinGlass data.
As the case against Rodriguez and Hill unfolds, the cryptocurrency community will closely watch the implications of this development for privacy-focused crypto services and the broader landscape of government regulation in the digital asset space.
