NY Prosecutors Charge Operators of Cryptocurrency Mixer for Facilitating Over $2B in Illegal Transactions

On Wednesday, April 24, 2024, New York federal prosecutors announced that they have charged two individuals for operating an unlicensed cryptocurrency mixing service that allegedly helped launder over $100 million in criminal proceeds through Bitcoin transactions over many years.

According to an indictment unsealed in Manhattan federal court, Keonne Rodriguez and William Lonergan Hill were charged with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. Rodriguez served as the CEO and co-founder and Hill as the CTO and also a co-founder of the company Samourai Wallet, a cryptocurrency wallet and mixing service that allowed users to conduct anonymous bitcoin transactions and execute over $2 billion worth of transactions since 2015.

Prosecutors allege that Rodriguez and Hill openly marketed Samourai Wallet as a way for users to conceal the source of funds, including proceeds from illegal dark web markets like Silk Road and Hydra Market, as well as various fraud schemes. As the co-founders of the unlicensed money transmitter, they earned millions of dollars in fees while facilitating significant criminal activity through the mixer, according to court documents.

Specifically, Samourai Wallet allegedly laundered over $100 million in criminal proceeds through its “Whirlpool” mixing feature and “Ricochet” multiple hop transactions that made it difficult for law enforcement to track funds on the public blockchain. The indictment cites Twitter posts by Hill encouraging the use of the service for sanctions evasion and acknowledging its importance in black markets. Marketing materials also promoted Samourai as a solution for users seeking to obscure “illicit activity.”

Following Rodriguez’s arrest in Pennsylvania and Hill’s arrest in Portugal, where he will face extradition proceedings, authorities shut down Samourai Wallet’s operations. This included coordinating with Icelandic authorities to seize servers and domains, as well as blocking its smartphone app from being downloaded any further through the Google Play Store in the United States.

If convicted, Rodriguez and Hill each face a maximum of 20 years in prison for the money laundering conspiracy charge and up to 5 years for operating an unlicensed money transmitting business.