The U.S. government has dispelled any suspicion of any involvement or utility in proprietary tools beyond creating code for crypto mixers.
It may be called an invasion of privacy or an attack on freedom of speech, but the basic truth is that any money that flows through an app designed to mix funds to protect users’ addresses is considered laundered funds, regardless of purpose or fate.
Bitcoin Fog. Money whirlwind. Now Samurai Wallet.
Samurai Wallet (its servers have been hijacked) is a Bitcoin wallet that promises to „keep your transactions private and your identity hidden” through a privacy-protecting service called „Whirlpool.”
Authorities say the wallet has processed more than $2 billion in illegal transactions, including at least $100 million through illegal dark web markets like Silk Road and Hydra Market. Similar arguments were made about Tornado Cash, which, when sanctioned by the US Treasury, criminalized every dollar that flowed through it.
„Together with our law enforcement partners, we will relentlessly pursue and dismantle criminal organizations that use cryptocurrencies,” US Attorney Damian Williams said in a statement on Wednesday.
Samourai Wallet co-founders Keonne Rodriguez, 35, and William Lonergan Hill, 65, have a lot to say about op-sec (literally „operational security”), or the apparent lack thereof. Rodriguez was arrested in Pennsylvania and will be arraigned this week, while the United States is still working to extradite Hill from Portugal.
„I don’t know how they thought they weren’t going to be arrested and prosecuted for this. It seems like the Department of Justice has direct evidence that they said people knew how to hide legitimate transactions and charge fees for services,” University of Kentucky law professor Brian Fry told CoinDesk.
The DOJ alleges that Rodriguez and Hill actively solicited criminal clients in their marketing posts and social media. For example, Hill said: „At Samurai we are completely anti-censorship and focused on the black/gray circular economy. This means that mass adoption is not expected,” in an intercepted internal message.
„Ultimately, if illicit financing is knowingly facilitated and profited as alleged in the complaint, the outlook is bleak,” venture capitalist Nick Carter said in a live message. „However, the extent to which the Biden administration seeks to criminalize privacy is troubling.”
The Biden administration has stepped up its efforts to crack down on blending services. This includes the arrest of Russian-Swedish national and Bitcoin fake operator Roman Sterling in April 2021, and participation in the arrest of the co-founders of Tornado Cash in 2023. However, crypto mixers have long been in the crosshairs of criminal prosecutors. In the Sterlingkov case, investigators worked for years to establish evidence.
Already inside May 2019 The US Treasury’s Financial Crimes Enforcement Network (FinCEN) is concerned about cryptocurrency „vessels”, finding that they are „individuals who accept and transport value ostensibly to protect transmitter privacy”. [ sic] „They are secure money transfer service providers and are not eligible for comprehensive exemption.”
In other words, mixers are remitters, although one person usually only sends funds Two directions of control Anonymize your funds. FinCEN noted that if you are considered a money transmitter, you are expected to comply with the Bank Secrecy Act.
„My opinion is that the crypto industry should treat regulation as 'force majeure’ and adapt accordingly,” said Tal Be’ery, co-founder and CTO of ZenGo Wallet. [La fuerza mayor es una cláusula legal común que exime a las partes de responsabilidad.] „The US government has made it clear by prosecuting Tornado Cash operators that operating a mixer is unacceptable, and that other mixers are highly anticipated.”
Others worry that the goal isn’t just to mix services, but rather to make all privacy-preserving blockchain technology.
„From the lawsuits against Tornado Cash to the IRS 'broker rule’ and the arrests of Samurai Wallet founders, it’s clear that the US government is moving aggressively against crypto privacy tools,” said CoinDesk Head of Research at Galaxy Digital, Alex. Thorn.
It’s worth noting that while Rodriguez and Hill have been active in overseeing the protocol since its introduction over a decade ago, Samurai Wallet has remained insecure and open source. The code is „self-hosted”. The repository is GitLab The company’s open source code, the LINK provided no longer works. Samurai apps have been removed from the Google and Apple app stores, although the software could theoretically be developed. Powered and hosted by anyone.
„Crypto mixers, in theory, can be legal if they are only used to protect the privacy of legal transactions, but using them to hide illegal transactions is certainly illegal,” Fry said.
„It is clear that if developers have any involvement in privacy tools beyond creating code, enabling interfaces, facilitating any kind of money transfer, or collecting fees, they will be targeted. For on-chain privacy to be successful in the future, the tools must be completely decentralized,” Thorne reiterated.
Others, such as TradeLayer founder Patrick Dugan, noted that it is also important whether the authors of a crypto-composite code profit from their discoveries. According to the indictment, Samurai allegedly earned at least $4.5 million in fees for his wallet and mixer services.
„Ultimately, the lawsuit will come down to any revenue mechanism that developers use, which could be an operating company in the eyes of prosecutors and make them guilty of money laundering by proxy,” Dugan said, adding that unlike Tornado Cash, Samurai Token does not.
Despite the real politics of the situation, many in the crypto community view the attack on crypto compounds as a violation of the basic human right to privacy.
“The government’s samurai seizure and arrest of its leaders is worrying. More like what a totalitarian regime would do than a free country. „I believe people have a fundamental right to privacy in their financial transactions, whether digital or physical,” said Crypto Detective. Ogle to CoinDesk in an interview.
„I’m a big fan of privacy services, so I don’t have any moral concerns about what’s going on,” said one Bitcoin Lightning developer, who asked to remain anonymous to discuss the situation more candidly. „But it’s very funny for them. If I understand the situation correctly, these two American citizens didn’t even do a great job of covering their tracks. So the arrests are not surprising.
Others noted that despite increasing pressure on privacy services, there will always be demand for these protocols from legitimate users and criminals.
„Given how easy it is to spin or use another mixer, it doesn’t solve the problem of laundering illicit funds,” Oakley said. „It takes you to another service.” Duggan noted that privacy coins are also in circulation for „those looking for a clean outlet through cryptocurrency privacy,” though „it’s not easy.” He added: „Use Monero, it’s listed almost everywhere, so you know it’s legit.”
Zooko Wilcox, founder of the privacy coin Zcash, told CoinDesk: „It’s legal to develop privacy technology in America, and we continue to do it because privacy and freedom are core parts of American civilization.”
Additional information provided by Cheyenne Ligon and Nikhilesh D.