Guilty Plea for Samourai Wallet Founders

The founders of Bitcoin mixer Samourai Wallet face up to five years in prison after pleading guilty on Wednesday to conspiracy to operate an unlicensed money transmitter.

In exchange for their plea, the U.S. Department of Justice (DOJ) agreed to drop a more serious money laundering charge, which could have resulted in a 20-year sentence. The unlicensed money transmitter charge carries a maximum sentence of five years.

Both William Lonergan Hill and Keonne Rodriguez had initially pleaded not guilty, but court documents revealed they changed their pleas on Tuesday.

Samourai Wallet enabled users to conceal their digital money transactions. In 2022, the DOJ and FBI shut down the platform and arrested Hill and Rodriguez, claiming it was utilized by criminals, and the defendants disregarded this.

Amanda Tuminelli, chief legal counsel for the nonprofit DeFi Education Fund, noted that the government was able to secure a conviction, averting the risk of losing the case. She emphasized that it is common for individuals to seek privacy in financial transactions.

> “Plea deals are risk calculations – for both the government and the accused. For the accused, you weigh limiting your downside risk against admitting to something you didn’t do. And the government weighs the possibility of losing at trial against securing an…” — Amanda Tuminelli (@amandatums)

The defense lawyers for Hill and Rodriguez did not respond to inquiries from Decrypt.

Tuminelli contended that the DOJ misinterpreted existing laws regarding what defines a money transmitter. She stated, “These pleas don’t change the fact that the DOJ misinterprets Section 1960 whenever they accuse a non-custodial software dev of ‘transferring funds on behalf of the public.'”

Samourai Wallet functioned as a coin mixing app, allowing users to hide the flow of their cryptocurrency. However, coin mixers are controversial, as they have been used by criminals to obfuscate the whereabouts of stolen digital assets.

Prosecutors alleged that the app laundered over $100 million in illicit funds, claiming it served as a major hub for money laundering and sanctions evasion.

This case comes amid the nearing end of the criminal trial for Roman Storm, co-founder of the privacy protocol Tornado Cash. U.S. authorities prohibited Americans from using Tornado Cash in 2022, citing its use by criminals for laundering purposes.

A judge is set to sentence Hill and Rodriguez on November 6.