Damian Williams, United States Attorney for the Southern District of New York; Thomas Fattorusso, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”); and James Smith, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), today announced the release of an indictment charging KEONNE RODRIGUEZ, CEO and Co-Founder of Samourai Wallet (“Samourai”), and WILLIAM LONERGAN HILL, Chief Technology Officer and also co-founder of Samourai, with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. These charges arise from the defendants’ development, marketing and operation of a cryptocurrency mixer that executed more than $2 billion in illegal transactions and facilitated more than $100 million in money laundering transactions from illegal dark web marketplaces such as Silk Road and Hydra Market; a web server intrusion; a spearphishing scheme; and schemes to defraud various decentralized finance protocols. RODRIGUEZ was arrested this morning and is expected to appear before a U.S. Magistrate Judge in the Western District of Pennsylvania today or tomorrow. HILL was arrested this morning in Portugal on US criminal charges. The United States will seek HILL’s extradition to stand trial in the United States. The case is assigned to U.S. District Judge Richard M. Berman.

In coordination with law enforcement authorities in Iceland, Samourai’s web servers and domain (https://samourai.io/) were seized. Additionally, a seizure warrant for Samourai’s mobile app was served on the Google Play Store. As a result, the application will no longer be available for download on the Google Play Store in the United States.

US Attorney Damian Williams said: “As alleged, Keonne Rodriguez and William Lonergan Hill are responsible for the development, marketing and operation of Samourai, a cryptocurrency mixing service that has executed more than $2 billion in illegal transactions. and served as a haven for criminals to engage in large-scale money laundering. Rodriguez and Hill allegedly knowingly facilitated the laundering of more than $100 million in criminal proceeds from the Silk Road, Hydra Market, and a host of other hacking and computer fraud campaigns. Together with our law enforcement partners, we will continue to relentlessly pursue and dismantle criminal organizations that use cryptocurrencies to conceal illicit conduct.”

IRS-CI Special Agent in Charge Thomas Fattorusso said, “$2 billion in transactions with an unlicensed money transmitter means that $2 billion flowed without any oversight, from anyone to anywhere. Due to the company’s disregard for regulation, it is alleged that Samourai Wallet laundered over $100 million in criminal proceeds. Special agents from the IRS:CI New York and IRS:CI LA cyber units worked with our federal and international law enforcement partners to not only arrest the founders and CEO, but also to seize their domains. Samourai Wallet is closed for business.”

FBI Assistant Director-in-Charge James Smith said: “Threat actors use technology to avoid law enforcement detection and create environments ripe for criminal activity. For nearly 10 years, Keonne Rodriguez and William Hill allegedly operated a mobile cryptocurrency mixing platform that provided other criminals with a virtual haven for clandestinely exchanging illicit funds, facilitating more than $2 billion in illegal transactions and $ 100 million in dark web money. washing. The FBI is committed to exposing secret financial schemes and ensuring that no one can hide behind a screen to perpetuate financial wrongdoing.”

According to the allegations in the indictment released today in Manhattan Federal Court:[1]

Samourai Background

From 2015 to February 2024, RODRIGUEZ and HILL developed, marketed and operated a cryptocurrency mixing service known as Samourai, an unlicensed money transmission business from which they earned millions of dollars in fees. Samourai illegally combined several unique features to execute anonymous financial transactions valued at over $2 billion for his clients. Although they offered Samourai as a “privacy” service, the defendants knew it was a haven for criminals to engage in large-scale money laundering and sanctions evasion. In fact, as defendants intended and well knew, a substantial portion of the funds that Samourai processed were proceeds of crime passed through Samourai for purposes of concealment. During the relevant period, Samourai laundered more than $100 million in criminal proceeds from, among other criminal sources, illegal dark web markets such as Silk Road and Hydra Market; various wire fraud and computer fraud schemes, including a web server intrusion, a spearphishing scheme and schemes to defraud various decentralized finance protocols; and other illegal activities.

RODRIGUEZ and HILL began developing Samourai around 2015. Samourai is a mobile app that users can download on their cell phones, and the app has been downloaded more than 100,000 times. Once users download Samourai, they can store their private keys for any BTC address they control within the Samourai program. These private keys are not shared with Samourai employees, but Samourai operates a centralized server that, among other things, oversees and facilitates transactions between Samourai users and creates new BTC addresses used during transactions. Samourai is used by customers around the world, including customers located in the United States and the Southern District of New York.

RODRIGUEZ and HILL designed Samourai to offer at least two features designed to help individuals engaged in criminal conduct conceal the source of proceeds from their criminal activities. First, Samourai offers a cryptocurrency mixing service known as “Whirlpool”, which coordinates batches of cryptocurrency exchanges between groups of Samourai users to avoid tracking criminal proceeds by law enforcement authorities on the Blockchain. Secondly, Samourai offers a service called “Ricochet”, which allows a Samourai user to create additional and unnecessary intermediary transactions (known as “skips”) when sending cryptocurrencies from one address to another. Likewise, this feature may prevent law enforcement authorities and/or cryptocurrency exchanges from recognizing that a particular batch of cryptocurrencies originates from criminal activity. Since the start of the Whirlpool service in or about 2019, and the Ricochet service in or about 2017, more than 80,000 BTC (worth more than $2 billion applying the BTC-USD conversion rates at the time of each transaction) passed through these two services. operated by Samourai. Samourai charges a fee for both services, estimated at around $3.4 million for Whirlpool transactions and $1.1 million for Ricochet transactions over the same period.

RODRIGUEZ and HILL’s knowledge and intent that criminal proceeds be laundered by Samourai

RODRIGUEZ and HILL operated Twitter accounts that openly encouraged and invited users to launder criminal proceeds through Samourai. For example, around June 2022, the Samourai Twitter account — operated by RODRIGUEZ — posted the following message about Russian oligarchs trying to circumvent sanctions:

Similarly, in a private message on or around August 27, 2020, HILL – using a Twitter account with the username “Samourai Dev” – discussed the use of Samourai by criminals operating in online black markets such as Silk Road, in private messages with another Twitter. user (the “Twitter User”) (emphasis added):

Twitter user: Silk Road is the reason I first found Bitcoin and the desire to continue engaging in these types of markets is one of the reasons I want to defend/strengthen these use cases. . .

Samurai Developer: No way. We probably have different opinions on some of the basics of bitcoin, you and I – to each our own, so to speak. At Samourai we are entirely focused on censorship resistance and the black/gray circular economy. This does not imply predictable mass adoption, although black/grey markets have already started to expand during Covid-19 and will continue to do so after Covid-19.. . . .

Furthermore, in response to Europol highlighting Samourai as a “major threat” to law enforcement authorities’ ability to track the proceeds of criminal activity, HILL published a message around March 2021 suggesting that Samourai would not change its practices in response to allegations that Samourai was being used for money laundering:

Similarly, RODRIGUEZ and HILL possessed and transmitted to potential investors marketing materials that discussed how Samourai’s customer base was intended to include criminals seeking privacy or the subversion of safeguards and reporting requirements by financial institutions. For example, in Samourai’s marketing materials, RODRIGUEZ and HILL similarly acknowledge that individuals most likely to utilize a service like Samourai include individuals involved in criminal activity, including “Restricted Markets.”

In the excerpt below from Samourai’s marketing materials, RODRIGUEZ and HILL acknowledge that their revenues will be derived from “dark/gray market participants” seeking to “exchange their bitcoins with multiple parties” to avoid detection:

In Samourai’s marketing materials, RODRIGUEZ and HILL promoted the Samourai Wallet and its “Mixing Service” as a “Premium Privacy Service” for transactions involving revenue from goods and services that include, among other things, “Illicit Activity.”

* * *

RODRIGUEZ, 35, of Harmony, Pennsylvania, and HILL, 65, a U.S. citizen who was arrested in Portugal, are each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years of prison, and one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum penalty of five years in prison.

Potential maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of defendants will be determined by the judge.

Williams praised the investigative work of IRS-CI and the FBI. He also acknowledged assistance from the Justice Department’s Office of International Affairs. Williams also thanked Europol, the Portuguese Judiciary Police, the Icelandic Police, the FBI Pittsburgh Field Office, the FBI International Operations Division, and the IRS-CI Los Angeles Field Office for their assistance in investigating this case.

This case is being handled by the Office’s Complex Fraud and Cybercrime Unit and the Office’s Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Andrew K. Chan and David R. Felton are in charge of the prosecution.

The charges contained in the indictment are mere accusations and the defendants are presumed innocent unless and until proven guilty.

[1] As the introductory sentence indicates, the entire text of the Indictment and the description of the Indictment set forth herein constitute allegations only, and each fact described must be treated as an allegation.

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