The US Department of Justice (DoJ) has announced Wednesday arrested the two co-founders of a cryptocurrency mixing service called Samourai and seized the service for allegedly facilitated more than $2 billion in illegal transactions and for laundering more than $100 million in criminal proceeds.
Here we are not talking about a real theft of cryptocurrencies, as has happened other times, but rather a way to send money around so as not to be caught by the police.
The end of Samourai Mixer
To that end, Keonne Rodriguez, 35, and William Lonergan Hill, 65, were charged with conspiracy to commit money laundering and conspiracy to operate an unauthorized money transmitting business from 2015 through February 2024; Rodriguez and Hill each face a maximum sentence of 25 years in prison.
Rodriguez, CEO of the company, and Hill, CTO, they intentionally designed Samourai to help”criminals to engage in large-scale money laundering and sanctions evasion“while apparently presenting itself as a privacy-oriented service, the DoJ said.
Samourai and virtual money laundering from the dark web
Samourai laundered money from illegal dark web markets, including Silk Road and Hydra, as well as spear-phishing schemes and scams aimed at defrauding multiple decentralized financial protocols.
The operation, which also involved law enforcement agencies from Iceland and Portugal, together with Europol, saw the seizure of his digital infrastructure and the withdrawal of his application for Android operating system from the Google Play Store in the United States; Hill, who was arrested in Portugal, is awaiting extradition to the United States. Rodriguez was arrested in Pennsylvania.
Samourai offered a “mixing” service (i.e. of mixing) cryptocurrency also known as Whirlpool to help users hide the path of cryptocurrency transactionsas well as incorporating a “unique transaction type” called Ricochet Send that made it possible to add intermediate hops when sending cryptocurrencies from one address to another.
How they bypassed US law enforcement
Whirlpool was coming advertised as a way to “mathematically dissociate ownership of inputs from outputs in a given bitcoin transaction“, which they said increases the privacy of the users involved, protects against financial surveillance and improves the fungibility of the Bitcoin network.
“Ricochet defends against bitcoin blacklists by adding additional decoy transactions between the initial send and the final recipient“, according to official documentation. “You should consider using Ricochet when sending to Bitcoin Exchanges and companies that are known to close accounts for trivial reasons“.
The functionality is designed for prevent law enforcement and/or cryptocurrency exchanges from recognizing that a particular series of cryptocurrencies originated from criminal activity, the DoJ said.
The arrest of the accused
In addition to openly persuading users (e.g., Russian oligarchs) to bypass sanctions and launder criminal proceeds via Samourai on their X account (formerly known as Twitter), the defendants were also found transmitting marketing materials to investors who described how their user base was bound to include online gamblers and criminals who need anonymity to conduct their illegal activities.
“Rodriguez and Hill recognize that their revenues will be derived from 'Black/Grey Market' participants who they try to 'trade their bitcoins with multiple parties' to avoid detection“the DoJ said.
The arrests came weeks after a former security engineer named Shakeeb Ahmed was sentenced to three years in prison in the United States for charges related to the hacking of two decentralized cryptocurrency exchanges in July 2022 and the theft of more than $12.3 million, which was then laundered using Samourai Whirlpool.
#Samourai #cryptocurrency #mixer #founders #arrested #fraud
