US sentences Samourai Wallet founders to 4 and 5 years for $200M crypto laundering

A US court gave the co-founder of Samourai Wallet, William Hill, four years in prison and his partner, Keonne Rodriguez, five years for running a crypto mixer that hid over $200 million in illegal money. 

The US Attorney’s Office for the Southern District of New York released a statement and said Samourai Wallet moved over $237 million from illegal activities.

Prosecutors say Samourai helped criminals hide their money

Rodriguez and Hill began building the Samourai Wallet in 2015 as a tool to help people conceal their Bitcoin. As years went by, they turned it into a service that helped criminals secretly move massive amounts of money from illegal activities like drug sales, online hacks, darknet markets, and fraud.

Prosecutors say the founders knew exactly what they were doing, as they had even designed powerful tools to help criminals cover their tracks and make it extremely difficult for law enforcement to trace. The goal was to ensure that criminals don’t get caught and victims never recover their money.

Samourai Wallet utilized a Bitcoin mixing service called Whirlpool to combine transactions from different users into large batches and send the Bitcoins back to their owners without revealing their origins. The wallet also used another tool called Ricochet to add more layers to transactions and make it harder for anyone to trace the money. 

Prosecutors say people moved more than 80,000 Bitcoin (over $2 billion) through Ricochet and Whirpool when they first launched in 2017 and 2019, respectively. Samourai charged criminals for using their services, and prosecutors claim the founders earned more than $6 million because the operations were so big and the transactions too numerous.

Prosecutors also showed that Rodriguez and Hill went a step further and promoted Samourai on a darknet forum called Dread, where people discussed illegal marketplaces. They told users Whirlpool was the best way for them to “clean dirty BTC” and make it untraceable. Rodriguez even encouraged hackers on public online exchanges to use the service instead of other platforms. 

It’s clear that the duo had no intention of masking their illegal activities because Rodriguez even described the process of mixing Bitcoin as “money laundering for Bitcoin.”

The judge says crypto laundering hurts victims and comes with tough penalties

Judge Denise Cote said the Samourai case was more than just about Bitcoin because Hill and Rodriguez caused serious harm to many victims who will never know the people responsible for stealing their money. She explained that the court had to send a strong message to others like them that using technology to help criminals would bring the full force of the law down on them. 

The judge sought to demonstrate that the law applies to cryptocurrency just as it does to other forms of money, and those who profit from aiding criminals will not escape responsibility.

Hill admitted to committing the crimes and apologized to the court, stating that he was well aware of the harm his actions had caused and would accept the consequences. “I pled guilty because I am guilty. I am deeply remorseful and ashamed of what I did.” Prosecutors seized on this obvious confession, citing it as evidence that the man was aware of the potential harm his actions could cause. 

Hill’s legal team asked the judge to be lenient with him because they claimed he had autism, so he would really struggle to survive in jail. They pleaded with Judge Cote to allow him a sentence of time served plus home confinement because he wanted to retire quietly with his wife.

The defense doubled down on its plea and even referenced how President Donald Trump had granted pardons to prominent crypto figures convicted of more serious crimes, such as Ross Ulbricht and Changpeng Zhao. They asked the court to consider these points as reasons to reduce Hill’s sentence because the pardons showed there were inconsistencies in how people receive punishments for crypto-related crimes. 

The judge, however, did not budge and rejected their arguments, stating that the crime was serious and the court had to set an example for others engaging in the same illegal activities. She made it clear that leniency could not make up for all the losses the victims suffered and sentenced Hill to four years in prison, which was still one year below the maximum for his charge.

Hill’s cofounder, Rodriguez, had already received his 5-year prison sentence in early November, and both men were also ordered to serve three years of supervised release and serve time. They also had to relinquish over $6.3 million in profits they earned from operating the service, despite prosecutors having sought the full $237 million.

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