Keonne Rodriguez, one of the co-founders of the cryptocurrency mixer Samourai Wallet, was sentenced to five years in prison on Thursday for his role in operating a service that allegedly laundered “hundreds of millions of dollars” derived from illegal dark web activities and fraudulent schemes. 

US District Judge Denise Cote imposed the maximum sentence for the charge of conspiring to run an unlicensed money-transmitting business during a hearing on Thursday.

Rodriguez Pleads Guilty In Samourai Wallet Case

Rodriguez entered a guilty plea to this charge back in July as part of a plea agreement with prosecutors. In a memorandum submitted by prosecutors on October 31, they requested five-year sentences for both Rodriguez and his fellow co-founder, William Lonergan Hill.

The filing alleged that for nearly a decade, the duo operated a significant money laundering operation through Samourai Wallet, facilitating the laundering of more than $237 million in criminal proceeds between 2015 and 2024. The transactions linked to their service were tied to various criminal activities, including fraud and even murder-for-hire plots.

At the sentencing, Judge Cote criticized Rodriguez for facilitating the laundering of funds often stolen from unsuspecting victims. “You chose to use your considerable talents to make it harder to recoup those stolen funds,” she remarked.

The Samourai Wallet case stands out as one of the few crypto-related prosecutions to survive President Trump’s pro-crypto administration, which led to the withdrawal of various enforcement actions by US regulators against significant firms such as Coinbase (COIN), Uniswap, and others. 

Recent guidelines released by the Department of Justice (DOJ) in April have raised the bar for prosecuting crypto mixers and service providers for the actions of their users, making Rodriguez’s case particularly noteworthy.

Founders Reach $237 Million Forfeiture Deal

Rodriguez’s defense team had requested a lenient sentence of just over a year, arguing that he had no prior criminal record and was seen as a model citizen and family man. 

They contended that when he started Samourai Wallet, his intention was to create a legitimate business that enhanced the privacy of cryptocurrency transactions. 

However, they acknowledged that over time, he became aware that some users were employing the service to transfer Bitcoin (BTC) from illicit activities, yet he continued to operate the business without taking steps to prevent such transactions. His lawyers characterized this behavior as regrettable criminal conduct.

Expressing his remorse during the sentencing, Rodriguez told the judge, “I am truly sorry and I understand the seriousness of my crimes.”

As part of their plea deal, both Rodriguez and Hill agreed to forfeit $237 million and pay a $400,000 fine. Hill is set to be sentenced on November 19. 

The case against Samourai Wallet bears resemblance to the DOJ’s prosecution of Tornado Cash, where developers were accused of facilitating over $1 billion in illicit transfers. 

Featured image from DALL-E, chart from TradingView.com 

Bitcoin Magazine

Samourai Wallet CEO Sentenced to Five Years for Operating Unlicensed Bitcoin Mixing Service

A Samourai Wallet developer was sentenced Thursday to five years in prison for operating a crypto mixing service prosecutors say laundered $237 million in illicit funds. 

Keonne Rodriguez, the CEO of Samourai Wallet, received the statutory maximum from U.S. District Judge Denise Cote of the Southern District of New York, following an hour-long hearing in Manhattan, according to journalist Frank Corva.  

Fellow developer William Lonergan Hill, the company’s CTO, is scheduled to be sentenced Friday.

Rodriguez and Hill were arrested in April 2024 and charged with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. After over a year of litigation, both pled guilty to the lesser unlicensed money transmitting charge in exchange for prosecutors dropping the more serious money laundering conspiracy charge, which carries a maximum of 20 years in prison.

Samourai Wallet allegedly hid criminal activity  

Prosecutors said the pair operated Samourai Wallet’s crypto mixing services, Whirlpool and Ricochet, to obscure the origins of criminal proceeds from drug trafficking, darknet marketplaces, cyber intrusions, fraud schemes, and murder-for-hire operations. 

Whirlpool coordinated batches of Bitcoin exchanges between users, while Ricochet introduced multiple intermediate transactions, or “hops,” to make tracing funds more difficult. From Ricochet’s 2017 launch and Whirlpool’s 2019 inception, more than 80,000 Bitcoin—  valued at over $2 billion at the time — passed through the services, generating over $6 million in fees.

Court documents reveal that Rodriguez and Hill actively encouraged criminal use of Samourai Wallet. In WhatsApp messages, Rodriguez described the service as “money laundering for bitcoin,” and Hill promoted Whirlpool on Dread, a darknet forum, as a tool to make illicit funds “untraceable.” 

Following a 2020 social media hack, the pair tracked stolen funds in real time and publicly urged hackers to launder the proceeds through Samourai Wallet.

The Department of Justice framed the case as part of a broader crackdown on cryptocurrency mixing services, following the August conviction of Tornado Cash co-founder Roman Storm for operating an unlicensed money transmitting business. 

Special agents from the IRS-Criminal Investigation and the FBI emphasized that Rodriguez and Hill not only facilitated but actively promoted laundering of illicit proceeds, undermining public trust in digital assets.

Rodriguez, 35, had requested a sentence of one year and a day, while Hill sought time served. Prosecutors had asked for the full five-year statutory maximum for both defendants, which Judge Cote imposed on Rodriguez. 

Hill’s sentencing is set for Friday at 11 a.m. ET.

This post Samourai Wallet CEO Sentenced to Five Years for Operating Unlicensed Bitcoin Mixing Service first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

District Judge Denise Cote sentenced Keonne Rodriguez to the statutory maximum. Fellow developer William Lonergan Hill will be sentenced later this month.

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