Nikolas Sargeant
U.S. prosecutors are seeking the statutory maximum five-year prison sentence for Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill, alleging they deliberately built and marketed a cryptocurrency mixing service that helped launder at least $237 million in criminal proceeds. The two founders were arrested on April 24, 2024, and pleaded guilty in July to conspiracy to operate an unlicensed money transmitting business. Rodriguez is scheduled to be sentenced on November 6, while Hill's sentencing is set for November 7. The case has been complicated by defense claims that prosecutors concealed evidence from an August 2023 conversation with FinCEN officials, though prosecutors firmly denied these allegations in a May filing, stating they provided all disclosure materials months before trial.
In a sentencing memorandum filed with the U.S. Attorney's Office for the Southern District of New York, prosecutors argued that Rodriguez and Hill "repeatedly solicited, encouraged, and invited criminals" to use their platform to conceal illicit funds. The criminal proceeds traced through Samourai originated from darknet markets including Silk Road and Hydra, multiple cryptocurrency exchange hacks, child sexual abuse material distribution sites, murder-for-hire plots, and sanctioned entities in Iran, Russia, and North Korea. Defense attorneys have argued that the disputed FinCEN conversation revealed officials believed Samourai's non-custodial structure "would strongly suggest" it wasn't functioning as a Money Services Business, potentially eliminating registration requirements.
Prosecutors emphasized that the developers weren't "mere bystanders," citing evidence that they actively solicited criminal users. A 2018 WhatsApp conversation revealed Rodriguez referring to mixing as "money laundering for bitcoin," while Hill promoted the service on dark web forums in 2020 and 2023 as a tool for "cleaning dirty Bitcoin" and rendering it "untraceable." The defendants collected over $6.3 million in fees from Samourai transactions, approximately 246.3 BTC, worth roughly $26.9 million today due to Bitcoin's appreciation. Prosecutors countered defense arguments by noting that FinCEN officials' remarks were informal personal opinions rather than definitive regulatory positions, and that officials "did not have a sense of what FinCEN would decide if this question were presented to their policy committee."
While the Probation Office recommended a sentence of 42 months for each defendant, prosecutors are pushing for the full five-year statutory maximum. In exchange for their guilty pleas, prosecutors dropped three more serious charges including conspiracy to commit money laundering and conspiracy to commit sanctions violations, each carrying potential 20-year sentences. The case unfolds amid evolving crypto regulation, with recently appointed SEC Chairman Paul Atkins withdrawing or delaying several high-profile cases against cryptocurrency firms, signaling a potential shift in the regulatory environment.
