Apr 25, 2024
NewsroomCryptocurrency / Cybercrime
The arrest of two co-founders of a cryptocurrency mixer known as Samourai was announced by the U.S. Department of Justice (DoJ) on Wednesday. They seized the service for allegedly enabling over \(2 billion in illegal transactions and laundering more than \)100 million in criminal proceeds.
Keonne Rodriguez, aged 35, and William Lonergan Hill, aged 65, have been charged with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business from 2015 through February 2024. Each of them faces a maximum sentence of 25 years in prison.
Rodriguez, serving as the CEO of the company, and CTO Hill deliberately designed Samourai to support “criminals in conducting large-scale money laundering and sanctions evasion,” while portraying it as a privacy-focused service, as per the DoJ.
Samourai engaged in laundering money from illicit dark web marketplaces like Silk Road and Hydra, as well as through spear-phishing schemes and scams targeting various decentralized finance protocols.
The operation, which also included collaboration with law enforcement agencies from Iceland and Portugal, as well as Europol, resulted in the confiscation of its digital infrastructure and the removal of its Android app from the U.S. Google Play Store. Hill, apprehended in Portugal, awaits extradition to the U.S., while Rodriguez was taken into custody in Pennsylvania.
Samourai provided a cryptocurrency mixing service called Whirlpool to help users obfuscate the cryptocurrency transaction trail. It also introduced an “exclusive transaction type” named Ricochet Send, enabling the addition of intermediate hops when transferring cryptocurrency from one address to another.
Whirlpool was promoted as a method to “mathematically disassociate the ownership of inputs to outputs in a given bitcoin transaction,” claiming to enhance user privacy, shield against financial surveillance, and enhance the fungibility of the Bitcoin network.
“Ricochet defends against bitcoin blacklists by adding additional decoy transactions between the initial send and eventual recipient,” according to official documentation. It is designed to prevent law enforcement and cryptocurrency exchanges from tracing a specific batch of cryptocurrency back to criminal origins, as alleged by the DoJ.
Apart from openly encouraging users, including Russian oligarchs, to evade sanctions and launder criminal proceeds through Samourai on their X (formerly Twitter) account, the defendants were also found distributing marketing materials to investors. These materials described how the user base of Samourai was intended to cater to online gamblers and criminals requiring anonymity for their illicit activities.
“Rodriguez and Hill acknowledge that its revenues will be derived from ‘Dark/Grey Market participants’ seeking to ‘swap their bitcoins with multiple parties’ to avoid detection,” stated the DoJ.
These arrests follow the sentencing of a former security engineer, Shakeeb Ahmed, to three years in U.S. prison for charges related to hacking two decentralized cryptocurrency exchanges in July 2022. Ahmed stole over $12.3 million, which was subsequently laundered using Samourai Whirlpool.
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