Cryptocurrency Mixing Platform Founders Sentenced For Money-Laundering

According to an article by Tushar Subhra Dutta of Cyber Security News, the convictions of Keonne Rodriguez and William Lonergan Hill, founders of the Samourai Wallet cryptocurrency mixing platform, mark a significant federal enforcement action against technology designed to facilitate financial anonymity for criminal purposes.

Unlike a crypto exchange, which is a platform for buying, selling, and trading cryptocurrencies, a cryptocurrency mixing platform obscures a user’s transaction history by combining their funds with other users’ funds.

The prosecution framed the case as a direct response to the deliberate construction and promotion of tools intended to frustrate lawful investigative processes. According to the government’s filings, Rodriguez and Hill began developing the platform around 2015 with the express aim of enabling users to obscure the origins of illicit proceeds. Their design introduced multiple layers of transactional concealment.

Investigators reported that more than 80,000 Bitcoins passed through the system, generating millions in fees.

Federal prosecutors said that the platform incorporated two principal mechanisms, Whirlpool and Ricochet. They operated together to disrupt blockchain tracing efforts. Whirlpool pooled user funds and coordinated exchanges among participants. Ricochet added extra transactions intended to complicate the attribution of senders and recipients.

Both founders directly promoted these services to darknet and cybercrime communities, according to the prosecution. They presented the tools as effective means of converting unlawful proceeds into seemingly unrelated transfers.

The case is a reminder that the Department of Justice is prepared to treat the intentional deployment and marketing of anonymizing financial technologies as criminal conduct when linked to illicit transactions.

Attorneys advising cryptocurrency businesses may wish to examine how systems designed to impede access to information about transactions, operational choices, user-facing communications, fee structures, and promotional strategies might be construed as evidence of willful facilitation.