US Government Seeks Maximum Prison Terms for Samourai Wallet Founders in Landmark Crypto Prosecution

In a significant escalation of federal efforts to combat cryptocurrency-enabled financial crime, prosecutors are demanding the maximum allowable prison sentences for Keonne Rodriguez and William Lonergan Hill, the founders of privacy-focused Samourai Wallet. This case represents one of the most aggressive prosecutions against cryptocurrency developers to date, raising profound questions about the legal boundaries of privacy technology in the digital asset space.

Founders Face Severe Sentencing After Guilty Pleas in Crypto Mixing Case

Federal prosecutors from the Southern District of New York filed a sentencing memorandum Friday seeking five-year prison terms—the statutory maximum—for both Rodriguez and Hill. The government alleges the pair deliberately designed, marketed, and operated their cryptocurrency mixing service as a haven for criminals to launder hundreds of millions of dollars in illicit proceeds. According to court documents, Rodriguez and Hill “repeatedly solicited, encouraged, and invited criminals” to use Samourai’s platform to conceal the origins of tainted funds, transforming what might have been a legitimate privacy tool into what prosecutors characterize as an enterprise deliberately catering to criminal actors.

The severity of the government’s stance follows the defendants’ July guilty pleas to conspiracy to operate an unlicensed money transmitting business involving funds known to be derived from criminal activity. This plea agreement resulted in prosecutors dropping three more serious charges that carried substantially longer potential sentences: conspiracy to commit money laundering, conspiracy to commit sanctions violations, and federal licensing violations. The first two charges each carried potential 20-year prison terms, making the plea arrangement potentially significant for the defendants despite the government’s current push for maximum penalties under the remaining charge.

Government Claims Extensive Criminal Use of Samourai Platform

Between its 2015 launch and April 2024 shutdown by authorities, Samourai allegedly processed at least $237 million in criminal proceeds, according to government filings. The prosecution’s case is bolstered by communications allegedly showing the defendants’ awareness and encouragement of illicit activity. In one particularly damaging piece of evidence cited by prosecutors, Rodriguez referred to Samourai’s mixing functionality as “money laundering for bitcoin” in a 2018 WhatsApp chat. Similarly incriminating, Hill allegedly promoted the service on dark web forums in both 2020 and 2023, explicitly marketing it as a solution for “cleaning dirty Bitcoin” and making transactions “untraceable.”

The financial benefits for the defendants were substantial, according to court documents. Rodriguez and Hill reportedly collected over $6.3 million in fees from Samourai transactions, amounting to approximately 246.3 Bitcoin. Due to Bitcoin’s price appreciation since those transactions, this sum would be worth approximately $26.9 million at current market values—a figure prosecutors likely hope will emphasize the profit motive behind the alleged criminal enterprise.

Prosecutors Detail Extensive Criminal Customer Base

The prosecution’s sentencing memorandum paints a disturbing picture of Samourai’s customer base, detailing how the service facilitated transactions linked to some of the darkest corners of the internet. According to government filings, criminal proceeds flowing through Samourai originated from notorious darknet marketplaces including Silk Road and Hydra, multiple cryptocurrency exchange hacks, platforms distributing child sexual abuse material, murder-for-hire schemes, and sanctioned entities in Iran, Russia, and North Korea.

This extensive catalog of alleged criminal facilitation forms the backbone of the government’s argument that Rodriguez and Hill were “not mere bystanders” but active participants who courted illicit users. The probation office has recommended 42-month sentences for each defendant, but prosecutors are pushing for the full five-year term allowable under 18 U.S.C. § 371, the statute covering conspiracy to operate an unlicensed money-transmitting business. Rodriguez’s sentencing is scheduled for November 6 at 11:00 a.m. ET, with Hill’s following on November 7.

Case Parallels Other Cryptocurrency Mixer Prosecutions

The Samourai case represents the latest chapter in an ongoing campaign by U.S. authorities against cryptocurrency mixing services, which they increasingly view as facilitators of money laundering rather than legitimate privacy tools. This prosecution follows similar legal actions against other cryptocurrency mixing platforms and their developers. In August, Tornado Cash developer Roman Storm was convicted of conspiracy to operate an unlicensed money transmitter, though jurors deadlocked on more serious money laundering and sanctions evasion charges, potentially setting up a retrial on those counts.

The U.S. Treasury Department previously sanctioned the Tornado Cash mixing protocol in August 2022, claiming it had facilitated the laundering of approximately $7 billion since 2019, with significant use by North Korean state-backed hackers from the Lazarus Group. While those sanctions were later deemed unlawful and subsequently lifted following legal challenges, the criminal cases against developers of both crypto mixing services have proceeded independently of the sanctions regime, creating a complex legal landscape for privacy-focused cryptocurrency tools.

Privacy Advocates Raise Concerns About Criminalization of Code

The aggressive prosecution of cryptocurrency mixer developers has raised significant concerns among privacy advocates and within the broader cryptocurrency community. Many argue these cases potentially criminalize the creation of open-source privacy tools themselves, rather than focusing exclusively on those who knowingly facilitate specific criminal transactions. This tension between law enforcement’s legitimate need to combat financial crime and the protection of privacy-enhancing technologies presents one of the most challenging legal and ethical dilemmas in the cryptocurrency ecosystem.

As Rodriguez and Hill face sentencing in early November, their case will likely establish important precedents regarding the legal liabilities of developers who create privacy-focused cryptocurrency tools. The outcome may significantly influence how future developers approach privacy features within the cryptocurrency space, potentially chilling innovation in privacy-preserving technologies while clarifying the legal boundaries between legitimate privacy tools and services designed primarily for money laundering. Whatever the court decides, this case marks a critical moment in defining the relationship between cryptocurrency privacy technology and the legal system’s approach to combating financial crime in the digital age.