Samourai wallet website seized by DOJ, developers arrested

[bbc.reporter]

It appears that after the arrest of the developer of Tornado Cash, I reckon no platform creators and software developers for privacy and anonymity in the cryptospace is safe. Will we witness the arrest of Monero and Zcash developers? This will certainly be very headshaking.



Keonne Rodriguez and William Lonergan Hill Are Charged with Operating Samourai Wallet, an Unlicensed Money Transmitting Business That Executed Over $2 Billion in Unlawful Transactions and Laundered Over $100 Million in Criminal Proceeds

Damian Williams, the United States Attorney for the Southern District of New York; Thomas Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”); and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging KEONNE RODRIGUEZ, the Chief Executive Officer and a co-founder of Samourai Wallet (“Samourai”), and WILLIAM LONERGAN HILL, the Chief Technology Officer and also a co-founder of Samourai, with conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business.  These charges arise from the defendants’ development, marketing, and operation of a cryptocurrency mixer that executed over $2 billion in unlawful transactions and facilitated more than $100 million in money laundering transactions from illegal dark web markets, such as Silk Road and Hydra Market; a web-server intrusion; a spearphishing scheme; and schemes to defraud multiple decentralized finance protocols.  RODRIGUEZ was arrested this morning and is expected to be presented today or tomorrow before a U.S. Magistrate Judge in the Western District of Pennsylvania.  HILL was arrested this morning in Portugal based on the U.S. criminal charges.  The United States will seek HILL’s extradition to stand trial in the United States.  The case is assigned to U.S. District Judge Richard M. Berman.

Read in full https://www.justice.gov/usao-sdny/pr/founders-and-ceo-cryptocurrency-mixing-service-arrested-and-charged-money-laundering

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[AB de Royse777]

Will we witness the arrest of Monero and Zcash developers?

It will not surprise anyone.

In documents, law books - it is allowed with terms. Big brothers will always use the terms in their service to take everything from you.

[Don Pedro Dinero]

The truth is that these are dark times for those of us who one day thought that a world that massively used P2P cash without intermediaries would be feasible. We are heading towards total control and the worst thing is that many people embrace it willingly.

[The Cryptovator]

Day by day, it will become very hard to hide ourselves as crypto users. We often want to increase privacy due to security reasons. Everyone, we aren't criminals here, but everyone likes to increase their privacy. But the fucking centralised government, which always wants to monitor us, doesn't like our privacy. So all the privacy services on the crypto will be identified and action taken against them. Already, many mixers and similar services have been seized. It's an ongoing process to break our privacy. 

[JeromeTash]

I think when you are a developer of a privacy tool or an advocate of privacy, you instantly become an enemy of different states and law enforcement agencies. Because they love to snoop around people's personal lives and finances, denying them that makes them hunt for you.

I always wonder why developers of Privacy leaning tools such as wallet and exchanges do not make themselves anonymous for safety purposes. Create a decentralized privacy tool and stay anonymous, like satoshi did. They will have no way of arresting you.

[tabas]

The truth is that these are dark times for those of us who one day thought that a world that massively used P2P cash without intermediaries would be feasible. We are heading towards total control and the worst thing is that many people embrace it willingly.

Dark times indeed. Privacy is important and the FED are showing that no one's going to value it anymore soon if they keep on chasing like this the services and projects that are giving every individual the increased in privacy for their transactions.
Anyway, there was already a thread about it that was posted yesterday: Samourai Wallet seized by the feds

[nc50lc]

Incidentally, Sparrow Wallet removed all of its samurai-whirlpool-related features right after that incident,
in this commit: github.com/sparrowwallet/sparrow/commit/1676676e06d8e7774d9eddc2f08663b1a2c49e3a

And even if an older version with whirlpool is used, there'll be no Samurai Whirlpool Coordinator to process it.

[shield132]

It appears that after the arrest of the developer of Tornado Cash, I reckon no platform creators and software developers for privacy and anonymity in the cryptospace is safe. Will we witness the arrest of Monero and Zcash developers? This will certainly be very headshaking.

No more room for privacy, not anymore. Many exchanges, including centralized and instant exchanges, many of them do not support Monero. There is not much talk about Zcash, if I notice articles, they are mostly about Monero, so I expect that Monero might become illegal to mine and use, this coin will be blocked probably. Anything that improves your privacy in financial world, will be blocked and the user will be highly punished. It won't surprise me if VPN and Tor will be banned soon.

I think that it was inevitable. In 2016 and yearly years, privacy was not a problem because these coins weren't popular and weren't massively adopted. Now they are very popular and accepted in many places, this is a threat for FED, they'll do whatever it takes to kill it but you know what makes me smile a little bit? They are banning mixers, privacy wallets, soon they'll probably ban privacy coins but something new will pop up, something better, stronger and it will be very difficult for them. Something new will always pop up, so nothing ends here.

[dkbit98]

Incidentally, Sparrow Wallet removed all of its samurai-whirlpool-related features right after that incident,
in this commit: github.com/sparrowwallet/sparrow/commit/1676676e06d8e7774d9eddc2f08663b1a2c49e3a

Yeah, they released new wallet version 1.9.0 yesterday and I think they would be next in the line to get seized and arrested if they didn't remove all Samourai Whirlpool stuff.
I think there are also some hardware wallet manufacturers who used to work with Samourai/Whirlpool and they might do the same thing, if they didn't do it already.

Remove Whirlpool client, and other Soroban related features and dependencies

https://github.com/sparrowwallet/sparrow/releases/tag/1.9.0

[SickDayIn]

I think that it was inevitable. In 2016 and yearly years, privacy was not a problem because these coins weren't popular and weren't massively adopted. Now they are very popular and accepted in many places, this is a threat for FED, they'll do whatever it takes to kill it but you know what makes me smile a little bit? They are banning mixers, privacy wallets, soon they'll probably ban privacy coins but something new will pop up, something better, stronger and it will be very difficult for them. Something new will always pop up, so nothing ends here.

What you have stated is a very important point - anything that the FED finds is a threat they will try and take down. For example, I have observed that privacy coins in Australia are completely banned/illegal, including Monero, Dash and ZCash. It won't be long before they become banned in places like the U.S.A. It's sad and disappointing, and I'm not sure if anything could be replaced by that is "better, stronger" if it's actually a policy based issue.

When the FEDs of this world do cryptocurrency investigations, using software like Chainalysis, TRM Labs, Eliptic etc (blockchain big data analysis), they encounter issues when cross-chain hopping occurs, or coins go into mixing services. Banning Samurai Wallet is one step to reduce the options available, and banning privacy coins is also another step. Soon we will see any decentralised exchange smart contract developers in trouble also..

[Pmalek]

Incidentally, Sparrow Wallet removed all of its samurai-whirlpool-related features right after that incident,
in this commit: github.com/sparrowwallet/sparrow/commit/1676676e06d8e7774d9eddc2f08663b1a2c49e3a

And even if an older version with whirlpool is used, there'll be no Samurai Whirlpool Coordinator to process it.

The Samurai team released a decentralized Soroban whirlpool at the beginning of April. Wouldn't it be possible to switch to a different coordinator using Soroban? From the little I read about it, Soroban was working and had decent traffic. I wonder if the government-friendly Wasabi wallet will ever get targeted. It probably never will.