Keonne Rodriguez, co-founder and CEO of Samourai Wallet, has been sentenced to five years in federal prison — the statutory maximum — for conspiracy to operate an unlicensed money-transmitting business. His co-founder William Lonergan Hill received four years. Both pleaded guilty in July 2025.
Samourai Wallet operated as a Bitcoin wallet application with a built-in mixing feature called Whirlpool, which used a CoinJoin protocol to combine multiple users’ transactions into a single transaction, obscuring the origin and destination of funds. The service processed approximately 80,000 BTC — over $2 billion at transaction-time prices — between its launch in 2015 and the founders’ arrest in April 2024.
The DOJ’s case established that a significant portion of Whirlpool’s volume consisted of criminal proceeds. Prosecutors traced $237 million in directly identifiable illicit funds through the service, including proceeds from Silk Road, Hydra, other darknet markets, and child sexual abuse material (CSAM) sites. The service also processed funds from sanctioned wallets.
The most damaging evidence was internal. In private communications, Rodriguez described Samourai Wallet as providing “money laundering for Bitcoin.” The founders were aware that their service was being used by criminals and took deliberate steps to avoid implementing any controls that might deter illicit use. They did not register with FinCEN, did not implement KYC procedures, and did not file suspicious activity reports.
The arrests in April 2024 provoked significant debate within the crypto community. Privacy advocates argued that non-custodial mixing tools — which allow users to improve their on-chain privacy without ever transferring custody of funds to the mixer operator — should not be subject to money-transmitting regulations. The defence raised similar arguments, contending that Samourai Wallet’s CoinJoin implementation never took custody of user funds, and therefore was not “transmitting” money in the statutory sense.
The court rejected this argument. Judge Torres found that Samourai Wallet’s Whirlpool service met the definition of money transmission regardless of custodial status, because it facilitated the transfer of value between parties. The guilty pleas mooted a full trial on the legal question, but the sentencing — the statutory maximum for Rodriguez — signals the court’s view of the seriousness of the conduct.
Privacy tools and criminal liability
The Samourai Wallet case, alongside the Tornado Cash prosecution, defines the current legal boundary for privacy-enhancing financial tools in the United States. And it is a boundary that makes many in the crypto community uncomfortable.
I think discomfort is appropriate — not because the convictions are wrong, but because the underlying question is genuinely difficult.
On one hand, the evidence in this case was overwhelming. The founders knew their service was laundering criminal proceeds. They said so, in writing. They deliberately avoided any compliance measures that might have reduced criminal use. When your own internal communications describe your product as “money laundering for Bitcoin,” the legal analysis is not subtle.
On the other hand, the precedent has implications that extend beyond bad actors. If non-custodial mixing tools are money transmitters, then a wide range of privacy-preserving technologies may fall within the regulatory perimeter. The practical question — how do you implement KYC on a tool that, by design, does not know who its users are? — does not have an easy answer.
My view, informed by years on both sides of the compliance-technology divide, is that the law is correct in principle but challenging in application. Financial privacy is a legitimate interest. But a privacy tool that processes $237 million in traceable proceeds from CSAM sites and darknet markets, operated by founders who openly acknowledge its use for money laundering, has crossed the line from privacy infrastructure into criminal facilitation. The statutory maximum sentence reflects that reality.
The harder cases — tools built by developers who genuinely attempt to prevent criminal use but whose technology is nevertheless exploited — will define the next phase of this legal evolution.