Samourai Wallet Founders Face Guilty Pleas in $2B Crypto Mixer Scandal – Privacy or Crime?
The hammer drops on privacy-focused crypto as Samourai Wallet's co-founders brace for guilty pleas in a landmark $2 billion mixing case. Here's why Wall Street won't lose sleep over it.
### When 'Financial Privacy' Crosses the Line
Feds allege the Bitcoin mixing service laundered funds for darknet markets—proving once again that 'disruption' sounds cool until the handcuffs click. The DOJ's case hinges on whether privacy tools inherently enable crime—a debate that just got a $2 billion price tag.
### The Irony of Decentralized Justice
While Samourai marketed itself as the Swiss bank account of crypto, its founders are learning the hard way that pseudonymity ≠ immunity. Meanwhile, traditional banks quietly settle bigger laundering cases with fines they write off as 'operating costs.'
The co-founders of Samourai are facing up to 25 years in prison
In April 2024, Samourai CEO Keonne Rodriguez and CTO William Lonergan Hill denied accusations that they were running an unlicensed money transmitting operation enabling over $2 billion in illegal transfers, including to dark web markets such as Silk Road.
The two now face a single consolidated conspiracy charge to launder money with a maximum prison term of 20 years. They are also accused of running an unlicensed money-transfer business, which carries an added five-year sentence, meaning they could see as much as 25 years in prison.
Federal Judge Denise Cote, in a court filing, set a Wednesday morning hearing to consider the plea changes. However, the court filing did not provide further details about how those amended pleas could influence sentencing. The trial, however, was scheduled to begin on November 3.
Earlier, the defendants had attempted to dismiss the case, arguing that a memo issued on April 7 by Deputy Attorney General Todd Blanche suggested the DOJ would not pursue cases involving unintentional breaches of regulations by crypto mixer operators.
Later, Samourai’s lawyers also claimed that the federal prosecutors had failed to disclose key advice indicating the firm didn’t need a money-transmission license—an assessment made half a year before charges were brought. Still, both attempts to derail the case fell flat.
Roman Storm is still being tried for his involvement in money laundering
In another case, the US court recently overturned the sanctions against crypto exchange Tornado Cash, which OFAC had blacklisted in August 2022. It ruled in favor of the plaintiffs, concluding that OFAC acted beyond its statutory authority by sanctioning Tornado Cash in 2022.
In a filing, the court wrote, “It is ordered and adjudged that the judgment of the district court is reversed, and the cause is remanded to the district court for further proceedings in accordance with the opinion of this court.”
The exchange had been sanctioned for allegedly aiding North Korea’s Lazarus Group in laundering $455 million in stolen cryptocurrency. One of its founders, Roman Storm, is currently being tried before a jury. His supporters, however, caution that a guilty verdict could criminalize open-source privacy tools and result in serious implications for DeFi innovation and digital privacy rights.
Storm has been charged with the following: conspiracy to commit money laundering and conspiracy to violate US sanctions. He faces up to 45 years in prison if convicted of all counts.
Last year, a Dutch court found Alexey Pertsev, another Tornado Cash developer, guilty of laundering $1.2 billion in illicit assets. It sentenced him to five years and four months.
Pertsev had previously insisted that he shouldn’t be responsible for users’ behavior. But the court didn’t buy that defense, saying that he and the other Tornado Cash co-founders could have done more to prevent the protocol from being used improperly.
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