Samourai Wallet Co-Founder Slammed with 5-Year Sentence—Crypto Mixing Now a High-Stakes Game

Privacy or prison? The co-founder of Samourai Wallet just got a harsh reality check—5 years behind bars for crypto mixing. The DOJ isn’t playing around.

When anonymity tools collide with regulators, the outcome is predictable: handcuffs. This verdict sends a clear message—financial opacity won’t fly, even in the ‘wild west’ of crypto.

Meanwhile, Wall Street’s legacy banks launder billions annually and get a slap on the wrist. But hey, at least they filed the right paperwork.

Judge imposes maximum sentence

Judge Cote said she found the severity of Rodriguez’s crimes warranted the full five-year term, describing his conduct as “very serious, anti-social criminal behavior.”

The defendant engaged over a period of years in very serious, “anti-social criminal behavior,” Cote said during the roughly hour-long hearing. “He identifies his motivation here as a desire to protect financial privacy. That’s fine, that’s good. We all want financial privacy. But I don’t think that’s really what was at stake here… There is no acknowledgement in that letter of the criminal world for whom digital currency is a gift.”

Judge Cote added that Rodriguez’s letter to the court “troubled” her because he failed to accept full responsibility. “He says his mistake was not getting a license — that misses the point,” she said.

Prosecutors accused Rodriguez of knowingly facilitating money laundering for cybercriminals, drug traffickers, and fraudsters through Samourai Wallet’s privacy-enhancing features. 

Prosecutors said that the Samourai Wallet platform allowed criminals to hide the source of more than $237 million worth of illegal bitcoin transactions, including money tied to darknet drug markets, online scams, and even a child exploitation website.

The prosecution also mentioned the Nirvana hack, which was among the transactions that passed through Samourai, and said Rodriguez knew criminals and sanctions evaders were using the service as early as 2015.

Judge Cote said she imposed the full five-year sentence to hold Rodriguez accountable and to send a message to others in the crypto world. She said that while financial privacy is an important principle, it can’t be used as a justification for hiding illegal money or helping criminals conceal their actions.

Background: The Samourai wallet case

Samourai Wallet, launched in 2015, was created as a Bitcoin wallet meant to help people keep their financial transactions private in an era when most online payments can be easily traced. Available on the Google Play Store, it was downloaded more than 100,000 times before being removed after the founders’ arrests in 2024.

The app included features like “Ricochet,” which routed Bitcoin through several intermediary wallets to obscure its final destination, and “Whirlpool,” a crypto mixing service that allowed users to combine their Bitcoin transactions with others to hide their source.

While privacy advocates hailed these tools as essential for protecting user anonymity on the public Bitcoin blockchain, prosecutors said they became a haven for criminals. According to court filings, over $2 billion worth of Bitcoin passed through Samourai Wallet’s features, of which around $250 million was tied to illegal activity.

In one 2018 WhatsApp exchange cited in court, Rodriguez reportedly described mixing as “money laundering for Bitcoin.” Prosecutors also pointed to online forums like Dread, a dark web alternative to Reddit, where co-founder William Lonergan Hill allegedly promoted Samourai’s services to users seeking to “clean dirty BTC.”

Plea deal and financial penalties

Rodriguez, 37, and Hill were arrested in April 2024 and initially charged with conspiracy to commit money laundering and conspiracy to operate an unlicensed money-transmitting business. Both men could have been sentenced to as many as 20 years in prison if they had been found guilty of money laundering. 

But in July 2025, they reached a deal with federal prosecutors and agreed to plead guilty to a lesser charge, running an unlicensed money-transmitting business, which carries a maximum sentence of five years.

As part of the plea deal, Rodriguez and Hill agreed to forfeit $237 million and pay a $400,000 fine. In addition, the court ordered $6 million in restitution, representing estimated earnings from the illegal operation.

At sentencing, Judge Cote imposed an additional $250,000 fine on Rodriguez and ruled that 20% of his gross monthly income during supervised release WOULD go toward paying off the fine. He will also serve three years of supervised release after completing his prison term.

The judge allowed Rodriguez to remain free on bail until his prison surrender date of December 19, 2025.

Defense pleads for leniency

Rodriguez’s defense team, led by attorney Michael Kim Krouse, urged the court for leniency, requesting a sentence of one year and one day. They argued that Rodriguez had been motivated by ideals of financial privacy and had no prior criminal history.

“Both before and after his arrest, Mr. Rodriguez selflessly used his computer coding skills and blockchain tracing abilities to help victims of cryptocurrency theft recover their funds,” Krouse wrote in a letter to the court. “Mr. Rodriguez did not set out to create a tool that would be used to commit money laundering.”

At the hearing, Rodriguez personally addressed the judge, saying, “I am truly sorry, and I understand the seriousness of my crime. I am remorseful. I can say, truly, that I will never break the law again. This experience has been dreadful.”

But Judge Cote was unmoved, saying his letter to the court reflected that he was still operating “with moral blinders on.” “You may be kind to strangers,” she said, “but if they are victimized, you chose to use your considerable talent to make it hard to recoup.”

Prosecutors: “He knew what he was doing”

Prosecutors said Rodriguez and Hill not only knew criminals were using Samourai to conceal illicit transactions but actively encouraged them to do so to boost revenue.

“To generate revenue, boost Samourai’s business, and earn millions of dollars in fees, Rodriguez and Hill repeatedly solicited, encouraged, and invited criminals to use Samourai to conceal their transfers of criminal proceeds,” prosecutors wrote in their sentencing memorandum.

They also cited an alleged “escape plan” found in Rodriguez’s home, detailing how he would use burner phones, cash-only motels, and back roads to evade law enforcement, proof, they said, that he knew he was breaking the law.

Crypto privacy on trial

The case has been closely monitored by crypto privacy advocates, who see it as part of a broader government crackdown on tools designed to protect anonymity on public blockchains.

Rodriguez’s sentencing follows that of Roman Storm, co-founder of another crypto mixer, Tornado Cash, who was convicted in August of the same charge, conspiring to operate an unlicensed money-transmitting business, after jurors could not reach a verdict on related money-laundering and sanctions charges.

Legal observers say both cases signal a pivotal moment in the U.S. government’s approach to digital privacy tools, drawing a sharper line between legitimate privacy technology and criminal facilitation.

Rodriguez’s co-founder, William Lonergan Hill, is scheduled to be sentenced on November 19 before the same judge.

As defense attorney Sam Bassett commented, “The imposition of the maximum sentence seems appropriate given the money involved.”

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