{"id":5036,"date":"2024-04-25T22:57:17","date_gmt":"2024-04-25T20:57:17","guid":{"rendered":"https:\/\/www.dhcab.com\/?p=5036"},"modified":"2024-04-25T22:57:17","modified_gmt":"2024-04-25T20:57:17","slug":"founders-and-ceo-of-cryptocurrency-mixing-service-arrested-and-charged-with-money-laundering-and-unlicensed-money-transmitting-offenses","status":"publish","type":"post","link":"https:\/\/www.dhcab.com\/?p=5036","title":{"rendered":"Founders And CEO Of Cryptocurrency Mixing Service Arrested And Charged With Money Laundering And Unlicensed Money Transmitting Offenses"},"content":{"rendered":"
\n
\n
Keonne Rodriguez and William Lonergan Hill Are Charged with Operating Samourai Wallet, an Unlicensed Money Transmitting Business That Executed Over $2 Billion in Unlawful Transactions and Laundered Over $100 Million in Criminal Proceeds<\/p>\n

Damian Williams, the United States Attorney for the Southern District of New York; Thomas Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (\u201cIRS-CI\u201d); and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (\u201cFBI\u201d), announced today the unsealing of an Indictment charging KEONNE RODRIGUEZ, the Chief Executive Officer and a co-founder of Samourai Wallet (\u201cSamourai\u201d), and WILLIAM LONERGAN HILL, the Chief Technology Officer and also a co-founder of Samourai, with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business.\u00a0 These charges arise from the defendants\u2019 development, marketing, and operation of a cryptocurrency mixer that executed over $2 billion in unlawful transactions and facilitated more than $100 million in money laundering transactions from illegal dark web markets, such as Silk Road and Hydra Market; a web-server intrusion; a spearphishing scheme; and schemes to defraud multiple decentralized finance protocols.\u00a0 RODRIGUEZ was arrested this morning and is expected to be presented today or tomorrow before a U.S. Magistrate Judge in the Western District of Pennsylvania.\u00a0 HILL was arrested this morning in Portugal based on the U.S. criminal charges.\u00a0 The United States will seek HILL\u2019s extradition to stand trial in the United States.\u00a0 The case is assigned to U.S. District Judge Richard M. Berman.
In coordination with law enforcement authorities in Iceland, Samourai\u2019s web servers and domain (https:\/\/samourai.io\/<\/a>) were seized.\u00a0 Additionally, a seizure warrant for Samourai\u2019s mobile application was served on the Google Play Store.\u00a0 As a result, the application will no longer be available to be downloaded from the Google Play Store in the United States.<\/p>\n

proceeds by law enforcement on the Blockchain.\u00a0 Second, Samourai offers a service called \u201cRicochet,\u201d which allows a Samourai user to build in additional and unnecessary intermediate transactions (known as \u201chops\u201d) when sending cryptocurrency from one address to another address.\u00a0 This feature similarly may prevent law enforcement and\/or cryptocurrency exchanges from recognizing that a particular batch of cryptocurrency originates from criminal activity.\u00a0 Since the start of the Whirlpool service in or about 2019, and of the Ricochet service in or about 2017, over 80,000 BTC (worth over $2 billion applying the BTC-USD conversion rates at the time of each transaction) has passed through these two services operated by Samourai.\u00a0 Samourai collects a fee for both services, estimated to be about $3.4 million for Whirlpool transactions and $1.1 million for Ricochet transactions over the same time period.
RODRIGUEZ and HILL\u2019s Knowledge and Intent for Criminal Proceeds to be Laundered by Samourai
RODRIGUEZ and HILL operated Twitter accounts that encouraged and openly invited users to launder criminal proceeds through Samourai.\u00a0 For example, in or around June 2022, Samourai\u2019s Twitter account \u2014 operated by RODRIGUEZ \u2014 posted the following message regarding Russian oligarchs seeking to circumvent sanctions:<\/p>\n

Similarly, in a private message on or about August 27, 2020, HILL \u2014 using a Twitter account with the username \u201cSamourai Dev\u201d \u2014 discussed the use of Samourai by criminals operating in online black markets such as Silk Road in private messages with another Twitter user (the \u201cTwitter User\u201d) (emphasis added):
Twitter User:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Silk Road is why I first found Bitcoin\u00a0and the desire to keep engaging in those types of markets is one reason that I want to defend\/strengthen those use cases . . .
Samourai Dev:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 No, not at all. We probably have different views on some basic tenets of bitcoin, you and I \u2013 so to each his own so to speak.\u00a0At Samourai we are entirely focused on the censorship resistance and black\/grey circular economy. This implies no foreseeable mass adoption, although black\/grey markets have already started to expand during covid and will continue to do so post-covid. . . .
Additionally, in response to Europol highlighting Samourai as a \u201ctop threat\u201d to the ability of law enforcement to trace the proceeds of criminal activity, HILL posted a message in or around March 2021 suggesting that Samourai would not change its practices in response to allegations that Samourai was being used for money laundering:<\/p>\n

Similarly, RODRIGUEZ and HILL possessed and transmitted to potential investors marketing materials that discussed how Samourai\u2019s customer base was intended to include criminals seeking privacy or the subversion of safeguards and reporting requirements by financial institutions.\u00a0 For example, in Samourai\u2019s marketing materials, RODRIGUEZ and HILL similarly acknowledge that the individuals most likely to use a service like Samourai include individuals engaged in criminal activities, including \u201cRestricted Markets.\u201d
In the below excerpt from Samourai\u2019s marketing materials, RODRIGUEZ and HILL acknowledge that its revenues will be derived from \u201cDark\/Grey Market participants\u201d seeking to \u201cswap their bitcoins with multiple parties\u201d to avoid detection:<\/p>\n

In Samourai\u2019s marketing materials, RODRIGUEZ and HILL promoted Samourai\u2019s Wallet and its \u201cMixing Service\u201d as a \u201cPremium Privacy Service\u201d for transactions involving the proceeds of goods and services that include, among other things, \u201cIllicit Activity.\u201d
*\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *
RODRIGUEZ, 35, of Harmony, Pennsylvania, and HILL, 65, a U.S. national who was arrested in Portugal, are each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison.\u00a0
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the investigative work of IRS-CI and the FBI.\u00a0 He also acknowledged the assistance of the Justice Department\u2019s Office of International Affairs.\u00a0 Mr. Williams also thanked Europol, the Portugal Judiciary Police, the Icelandic Police, the FBI Field Office in Pittsburgh, the FBI\u2019s International Operations Division, and the IRS-CI Los Angeles Field Office for their assistance in the investigation of this case.
This case is being handled by the Office\u2019s Complex Frauds and Cybercrime Unit and Illicit Finance and Money Laundering Unit.\u00a0 Assistant U.S. Attorneys Andrew K. Chan and David R. Felton are in charge of the prosecution.
The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.<\/p>\n

[1]\u00a0As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.<\/p><\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Keonne Rodriguez and William Lonergan Hill Are Charged with Operating Samourai Wallet, an Unlicensed Money Transmitting Business That Executed Over $2 Billion in Unlawful Transactions and Laundered Over $100 Million in Criminal Proceeds Damian Williams, the United States Attorney for the Southern District of New York; Thomas Fattorusso, the Special Agent in Charge of the […]<\/p>\n","protected":false},"author":1,"featured_media":5037,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":["post-5036","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-issues"],"_links":{"self":[{"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/posts\/5036","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5036"}],"version-history":[{"count":0,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/posts\/5036\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/media\/5037"}],"wp:attachment":[{"href":"https:\/\/www.dhcab.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5036"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5036"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5036"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}