Crypto Privacy Under Threat: Samourai Wallet Founders Convicted - Looms the Demise?
Samourai Wallet Founders Plead Guilty to Operating Unlicensed Crypto Mixing Service
In a significant development, the co-founders of Samourai Wallet, Keonne Rodriguez and William Lonergan Hill, have changed their pleas to guilty in a case related to operating an unlicensed crypto mixing service.
The decision comes after strategic legal considerations and an initial plea of not guilty, followed by an attempt to dismiss the case. Their defense relied on an April 2024 Deputy Attorney General memo suggesting the DOJ would not pursue cases involving unintentional regulatory breaches by crypto mixers. They also argued that Samourai Wallet did not legally qualify as a money transmitter, attempting to obtain evidence from FinCEN to support this claim. However, the DOJ maintained they did not have to disclose this information, and the prosecution continued.
Facing serious charges, including conspiracy to launder money (carrying a maximum 20-year sentence) and operating an unlicensed money transmitting business (an additional 5 years), the founders likely reassessed their position in light of the prosecution's strong case. Prosecutors presented evidence that Samourai's features, Whirlpool and Ricochet, were deliberately designed to conceal transaction origins, and the founders were aware that Samourai was used for criminal activities, including illicit marketplace transactions exceeding $2 billion.
In the court filings on July 29, 2025, and the subsequent guilty plea hearing on August 2, 2025, the founders pleaded guilty to the unlicensed money transmission charge while not pleading guilty to all charges. This move could be part of an effort to mitigate sentencing or streamline trial proceedings, considering the weight of evidence and the risk of a lengthy trial scheduled to begin in November 2025.
The case highlights the increasing risks for developers of privacy tools under current regulations. It also questions whether building or using open-source privacy tech puts people at risk. This moment reflects the ongoing challenge of balancing innovation with regulation in the crypto space.
Privacy tools and decentralized projects must navigate a complex legal landscape while striving to protect user rights. The outcome of cases like this will influence not just individual projects but the broader path of blockchain technology. For the SHIB ecosystem, this case is a reminder that permissionless doesn't mean risk-free.
U.S. District Judge Denise Cote has scheduled hearings for Wednesday morning to address the co-founders' expected changes in plea. This development underscores the clash between innovation and regulation that will likely intensify as the crypto space evolves.
[1] The Verge [2] CoinDesk [3] Bloomberg [4] Reuters
- The guilty plea by Samourai Wallet's co-founders, Keonne Rodriguez and William Lonergen Hill, underscores the complexities of balancing innovation and regulation in the blockchain technology landscape, especially for privacy tools.
- Facing charges for operating an unlicensed money transmitting business, the founders' decision to plead guilty to certain charges may highlight the potential risks of building or using open-source privacy tech, particularly in relation to the ongoing regulatory scrutiny of the crypto space.
