Samourai Wallet Co-Founder Sentenced for Money Laundering
On Thursday, Keonne Rodriguez, co-founder of Samourai Wallet, was sentenced to five years in prison after being found guilty of charges related to his wallet software that enabled criminals to launder substantial amounts of Bitcoin. This sentence represents the harshest penalty he could face for his actions.
This verdict follows closely behind the sentencing of Binance co-founder Chenpang “CZ” Chao to death, as President Trump has indicted Chao for money laundering activities associated with his role at a cryptocurrency exchange.
In court, Judge Cote remarked, “His business was being marketed to the criminal world. He literally laundered criminal funds. There is no recognition of the human suffering incited by the defendant.” The judge also mentioned the pending judgment on efforts to recover funds from hacking incidents.
Prosecutors highlighted that Samourai Wallet included features named Ricochet and Whirlpool, which enhanced user privacy and assisted in money laundering. While many Bitcoin enthusiasts argue that Samourai Wallet is simply open-source software, there are concerns about centralization, as the wallet’s server charged fees, even though it claimed to operate in a non-custodial manner.
Another significant point brought up during the trial was Samourai Wallet’s social media presence, particularly on X, which prosecutors argued enabled its use by criminals.
In addition to the five-year prison term, Rodriguez was fined $250,000 and will undergo three years of supervised release. His co-founder, William Lonergan Hill, is still waiting for his sentencing date.
Reports indicate that Rodriguez pled guilty to a section of the Transfer Licensing Act regarding the intentional transfer of proceeds from illegal activities, paralleling the case of Tornado Cash developer Roman Storm, who faced similar charges this year.
Tornado Cash, which allows users to mix funds for privacy on the Ethereum blockchain, didn’t face the same level of scrutiny regarding centralization in its operation.
Meanwhile, Matthew Galeotti, Acting Assistant Attorney General, stated that developers of “truly decentralized” cryptographic software won’t face new charges as long as their systems do not involve third-party control of user assets.
Despite Trump asserting a commitment to act as the “crypto president” during his tenure, protections for software developers and node operators have not yet been established in federal law. Currently, the only significant action has been an executive order discussing safeguards for non-custodial cryptocurrency developers.
The GENIUS Act, which was passed earlier this year, is primarily focused on stablecoins, a strategy viewed by the Trump administration as a means to safeguard the U.S. dollar globally. However, uncertainty surrounds the bill’s fate amid ongoing government shutdowns and delays.
CoinCenter, an advocacy group for cryptocurrency, recently emphasized the importance of retaining developer protections outlined in the House version of the Clarity Act as it moves to the Senate.
“These are fundamental and reasonable restrictions on who needs approval before engaging in activities related to digital goods,” stated Peter Van Valkenburgh from CoinCenter. He raised concerns about treating mere publishers of wallet software as if they controlled the financial assets of their users.
As centralized exchanges benefit from leniency while a wallet developer is sentenced, questions about the Trump administration’s priorities arise. With some lawsuits against dubious token sellers dismissed, developers simply creating or utilizing software might find themselves increasingly vulnerable.
If further protections for software creators aren’t included in the upcoming Transparency Act, Trump’s role as a key player in cryptocurrency regulation may become even more pronounced, potentially benefiting his own interests and those of his family in the crypto sector.
