Wednesday, May 1, 2024

Crypto Mixer Executives Arrested For Allegedly Participating In $2B of Illicit Transactions

According to Law360New York federal prosecutors announced that they have arrested the co-founders of crypto mixing service Samourai Wallet over their operation of a crypto service that authorities say executed over $2 billion in unlawful transactions.

The unsealed indictment charges Samourai CEO Keone Rodriguez and Chief Technology Officer William Lonergan Hill with one count of conspiracy to commit money laundering and one count of conspiracy to operate an unlicensed money transmitting business related to their roles in a business prosecutors say executed more than $100 million in money laundering transactions from dark web markets such as Silk Road and Hydra.

"While offering Samourai as a 'privacy' service, the defendants knew that it was a haven for criminals to engage in large-scale money laundering and sanctions evasion," the indictment said. "Indeed, as the defendants intended and well knew, a substantial portion of the funds that Samourai processed were criminal proceeds passed through Samourai for purposes of concealment."

While crypto mixers are privacy tools that can be used for lawful purposes, they are also favored by illicit actors because of their ability to obscure the path of funds. The services break down and batch crypto transactions to make the trail of transactions on the blockchain harder to follow.

According to federal prosecutors, Rodriguez and Hill developed, marketed and operated the Samourai mixing service as an unlicensed money transmitting business, earning millions of dollars in fees despite knowing criminals used the service for money laundering and sanctions evasion since its founding in 2015.

Authorities Highlighted Posts And Messages Allegedly From The Co-Founders Discussing
The Platform's Use By Russian Oligarchs And
Criminals Utilizing Online Black Markets, As
Well As Marketing Materials That Promoted
Its Services For "Illicit Activity."

Authorities arrested Rodriguez on Wednesday with plans for him to see a judge in the Western District of Pennsylvania on Thursday, the U.S. Department of Justice said in its announcement. 

Hill was arrested in Portugal on Wednesday, and prosecutors will seek his extradition to face criminal charges in New York alongside Rodriguez. 

Together, the Charges Carry a Maximum Sentence of 25 Years!

Law enforcement also coordinated with Icelandic authorities to seize Samourai's web servers and domain, and served a seizure warrant on the Google Play Store to remove the mobile application for U.S. users.

Authorities have ramped up their scrutiny of crypto mixers in recent months, sanctioning multiple services, winning a conviction against the operator of the Bitcoin Fog mixer and pursuing a criminal case against the founder of Tornado Cash.

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