After Samourai, Doj’s Money-transmitter Theory Now Looms Over...
Samourai Wallet’s co-founders received four- and five-year prison terms in the US for operating an unlicensed money-transmitting business through their non-custodial crypto mixer.
Keonne Rodriguez and William Lonergan Hill were sentenced on Wednesday for conspiring to operate an unlicensed money-transmitting business and for facilitating transactions involving criminal proceeds, the US Department of Justice (DOJ) said. Prosecutors argued that Samourai’s CoinJoin mixing service helped conceal the movement of illicit funds, even though the wallet was fully non-custodial.
“The sentences the defendants received send a clear message that laundering known criminal proceeds—regardless of the technology used or whether the proceeds are in the form of fiat or cryptocurrency — will face serious consequences,” US Attorney Nicolas Roos said.
The sentencing follows their arrest in April 2024 and their release on a $1 million bond after pleading not guilty in late April of last year. In late July, the co-founders said they would change their plea to guilty ahead of the recent sentencing. The shuttering of Samourai also led to the development of an open-source alternative to Ashigaru in September 2024.
Despite never having control over the Bitcoin (BTC) being mixed, Samourai coordinated the mixing through its Whirlpool CoinJoin implementation, which the judge found sufficient to rule that it constituted a money transmission service. Court documents clearly noted that “all Whirlpool transactions are coordinated by Samourai’s server,” and broadcasting “Ricochet” transactions to the Bitcoin network.
Prosecutors said this amounted to transferring funds on behalf of customers without the licensing required by the Financial Crimes Enforcement Network (FinCEN).
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The DOJ pointed out that the co-founders “created the core features of Tornado Cash, paid for critical infrastructure to operate it, promoted the service, and made millions in profits.”
In October, Tornado Cash co-founder Roman Storm asked decentralized finance developers, “How can you be so sure you won’t be charged by the DOJ as a money service business for building a non-custodial protocol?” He argued that the DOJ could claim that any decentralized, non-custodial service should have been developed as a custodial service, since he was prosecuted for failing to implement centralized control measures.
US Judge Don Willett, who authored t
Source: CoinTelegraph
