Is privacy oriented wallet software development still an operational risk?

[alani123]

Not so long ago the developers of Samourai wallet were arrested:

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

Now there has been no clear resolution to their case. Albeit the recent administration in the US appears to be more crypto friendly on the surface, the continuous mistreatment of wallet developers doesn't appear to have ceased.

What are your thoughts and insights on this matter?
Would developing privacy oriented wallet software remain a risk?

[Charles-Tim]

Not so long ago the developers of Samourai wallet were arrested:

The article on your link above has been published since Wednesday, April 24, 2024 and definitely we have discussed about it before on this forum when it happened.

You have a good question, but it is not a technical question at all.

I thought they are not in jail and the case is still ongoing?

[Cookdata]

Now there has been no clear resolution to their case. Albeit the recent administration in the US appears to be more crypto friendly on the surface, the continuous mistreatment of wallet developers doesn't appear to have ceased.

What are your thoughts and insights on this matter?
Would developing privacy oriented wallet software remain a risk?

By now, you should know that any government institution that trace any money and they couldn't get to the destination where the Money is spent, they consider that money to be laundered, they want every detail of how that money is been spent but you know that's not happening. People have right to their privacy and how they want to spend their money but government nose is everywhere, they want to know how? Where? When? All details about the funds connection and that's wrong.

Privacy is for everyone and that's not crime, they will get out eventually if they don't have case against them.

[alani123]

Not so long ago the developers of Samourai wallet were arrested:

The article on your link above has been published since Wednesday, April 24, 2024 and definitely we have discussed about it before on this forum when it happened.

You have a good question, but it is not a technical question at all.

I thought they are not in jail and the case is still ongoing?

You're right, I've moved the topic to the Legal board voluntarily.

I recently read that prosecutors rejected the dismissal bid of the developers:

https://www.dlnews.com/articles/regulation/samourai-wallet-devs-stuck-legal-limbo-reject-case-dismissal/

What this could mean is that there's still a lot of uncertainty. Because if the charges stick, then the US would not leave any privacy wallet dev alone anywhere in the world. Even for more lightweight charges such as piracy, US federal employees have initiated arrests of persons even abroad, like for instance the zLibrary founders who were arrested in Latin America...

Until there's some regulatory clarity I guess it'll be harder to see any serious privacy wallet development taking place. At least not in the sense that it's supported by some organization that can provide funding officially.

[Z-tight]

Now there has been no clear resolution to their case. Albeit the recent administration in the US appears to be more crypto friendly on the surface, the continuous mistreatment of wallet developers doesn't appear to have ceased.

To be fair, the old administration was in office when they were arrested, so yeah, the new administration cannot simply close every case against crypto services or developers, even if they may want to.

However, isn't it obvious that the DOJ does not have any case against Samourai wallet developers, the said wallet was never a money service business, how then can you charge them for being an unlicensed money transmitter, when the wallet does not take any custody of customer funds, doesn't make any sense. The DOJ/prosecutors should know this and i wonder when they would stop this regulation by enforcement and drop this charge.

[zasad@]

I have written about this several times, that despite the friendly policy of the US government towards cryptocurrencies, there are certain rules that cannot be violated. Any attempts that will not allow the government to conduct blockchain analysis will be punished by criminal cases that will last a very long time.

[Z-tight]

I have written about this several times, that despite the friendly policy of the US government towards cryptocurrencies, there are certain rules that cannot be violated. Any attempts that will not allow the government to conduct blockchain analysis will be punished by criminal cases that will last a very long time.

What rules was violated here? How can a service that doesn't hold custody of funds be charged with unlicensed money transmitting charges, does not make sense to me. The prosecution even consulted finCEN about the charges, of which they have been educated that Samourai does not fall under a money service business and hence they do not need that license. What is obvious here is not a violation, but an abuse of law and an overreach.

[zasad@]

I have written about this several times, that despite the friendly policy of the US government towards cryptocurrencies, there are certain rules that cannot be violated. Any attempts that will not allow the government to conduct blockchain analysis will be punished by criminal cases that will last a very long time.

What rules was violated here? How can a service that doesn't hold custody of funds be charged with unlicensed money transmitting charges, does not make sense to me. The prosecution even consulted finCEN about the charges, of which they have been educated that Samourai does not fall under a money service business and hence they do not need that license. What is obvious here is not a violation, but an abuse of law and an overreach.

These are excerpts from articles posted by alani123:
"The developers, Keonne Rodriguez and William Lonergan Hill, are facing charges of conspiracy to commit money laundering and operating an unlicensed money transmitting business."

"U.S. Attorney Damian Williams said: “As alleged, Keonne Rodriguez and William Lonergan Hill are responsible for developing, marketing, and operating Samourai, a cryptocurrency mixing service that executed over $2 billion in unlawful transactions and served as a haven for criminals to engage in large-scale money laundering.  Rodriguez and Hill allegedly knowingly facilitated the laundering of over $100 million of criminal proceeds from the Silk Road, Hydra Market, and a host of other computer hacking and fraud campaigns.  Together with our law enforcement partners, we will continue to relentlessly pursue and dismantle criminal organizations that use cryptocurrency to hide illicit conduct.” "

__
I'm not an expert on American law, but I draw a simple conclusion that only those cryptocurrency companies that have the same tight controls as banks don't have problems in the US.

[logfiles]

What are your thoughts and insights on this matter?

The Governments have never always been fair. The data and financial records of all their citizens are a gold mine to them, so there is no way they will look at wallets that are promoting user privacy with a smile in the long run. So even when the current US administration claims that they are crypto-friendly, they might be looking at having all the crypto pass through only compliant centralized exchanges and wallets. Anything else will be considered "illegal"

Would developing privacy-oriented wallet software remain a risk?

Yes

Developers just have to practice anonymity when doing so. That's the only way to evade the stupid arrests and imprisonments.

[Z-tight]

I'm not an expert on American law, but I draw a simple conclusion that only those cryptocurrency companies that have the same tight controls as banks don't have problems in the US.

Yeah i guess so too, they are so focused on fighting privacy in crypto that they go against their own law on services that require money transmitting license just to prove a point. However, i obviously understand the stand of centralized governments regarding privacy in general, which is they don't like it. I would really love to see how this case ends and if this developers will be sentenced to jail for this.

[FP91G]

Trump Promises to Look Into Jailed Samourai Wallet Founder’s Case
Trump says he will review a pardon for Samourai Wallet co-founder Keonne Rodriguez.

U.S. President Donald Trump said he would consider pardoning convicted Samourai Wallet co-founder Keonne Rodriguez. He made the comment at a White House press conference.
In November, a court sentenced the wallet’s creators to prison for laundering more than $237 million. Rodriguez received five years in prison, and his colleague William Lonergan Hill got four.

Prosecutors said they “repeatedly incited, encouraged and urged criminals” to use their platform to conceal illicit funds.

Rodriguez responded to Trump’s remark by thanking the community for its support.
Link

[YOSHIE]

What are your thoughts and insights on this matter?
Would developing privacy oriented wallet software remain a risk?

Maybe the founders of Samourai Wallet don't have any problems with the law, if they had a permit from the start and didn't carry out money laundering, try not to carry out illegal activities, that's the problem, greed can destroy us.

In the Samourai Wallet legal case, the case is widespread, what's more, the parties demanding that they get real support from investigations from the FBI and IRS, this situation is much more complicated and lengthy. I'm pretty sure those who develop crypto privacy services are considered to be responsible for their illegal platform activities, I believe they will be safe from US law if President Donald Trump issues momentum and positive policies, otherwise Samourai Wallet is finished.

[Z-tight]

Maybe the founders of Samourai Wallet don't have any problems with the law, if they had a permit from the start and didn't carry out money laundering, try not to carry out illegal activities, that's the problem, greed can destroy us.

What sort of permit are you talking about here? This was not a custodial service, it was a self custodial privacy-oriented software. You cannot create such service and police how people would use it, that defeats the whole purpose. Just the same way you should not be able to hold the developers liable for how people chose to use their creation, but i guess the law in this case had other 'ideas' and interpretation.

[alani123]

Do people not realize that the developers of Samurai wallet already got sentenced with a pretty harsh sentence?

It's obvious the US gov even under the trump admin tried to go hard on them. Obviously the US feds will not want widespread anonymous payments. That should answer my question in the OP but I'm leaving the thread open for discussion
 

[Lucius]

Privacy has long since become something that for "them" is not a human right, but a threat against which they fight with all possible means. The average person is not at all aware that the level of supervision of various agencies is so great that everything they say, write or do is somewhere recorded, analyzed and, if necessary, additionally processed.

Cryptocurrencies and any anonymity that comes from them are a threat to "them", and they have been fighting against it for more than a decade. Those who thought they would get a crypto-friendly president who would view privacy as something normal were (and some still are) deeply mistaken - to him, cryptocurrencies are a means of generating profit, and anyone who seeks privacy in them is suspicious.

[Z-tight]

It's obvious the US gov even under the trump admin tried to go hard on them. Obviously the US feds will not want widespread anonymous payments. That should answer my question in the OP but I'm leaving the thread open for discussion

Samourai wallet developers were arrested and charged for operating an unlicensed money transmitting business under the Biden administration. So it is safe to say they were prosecuted by the administration that initiated the process. I'm not saying the Trump administration is now privacy friendly, actually i don't believe any centralized government is, but America under Trump is obviously more crypto friendly than the past administration.

Trump even discussed a potential pardon for Samourai wallet developers, though i am not hopeful that would happen.

[PrivacyG]

Trump even discussed a potential pardon for Samourai wallet developers, though i am not hopeful that would happen.

I would be happy if he did pardon them, but the last pardon was for Ulbricht and it seemed like no other thing than just a good Marketing move for his own Campaign.  Considering he does not necessarily need to gather more support today, that may be only an 'ace under the sleeve' that he may use when he needs it.  At least this is how I feel about it.

[Z-tight]

I would be happy if he did pardon them, but the last pardon was for Ulbricht and it seemed like no other thing than just a good Marketing move for his own Campaign.  Considering he does not necessarily need to gather more support today, that may be only an 'ace under the sleeve' that he may use when he needs it.  At least this is how I feel about it.

I would have to agree with you on this one. He said he would look into their case, but this was in December of last year and since there is no new development up until now, maybe there wouldn't be any. Some could say he looked into it, but didn't think they deserved a pardon from him. I'd have loved if they got one, i don't even mind if Trump decides to do it when 'he needs something', i just don't think the devs deserve to spend time in prison.

[NotATether]

It's obvious the US gov even under the trump admin tried to go hard on them. Obviously the US feds will not want widespread anonymous payments. That should answer my question in the OP but I'm leaving the thread open for discussion

They cannot ban Monero because it is decentralized.

So the simple solution is to decentralize coinjoins. Make it like Mastodon where anybody can run their own federated server which sends data (in this coinjoins) between other servers.

The government was only able to take down Samourai wallet because they were centralized.

[alani123]

It's obvious the US gov even under the trump admin tried to go hard on them. Obviously the US feds will not want widespread anonymous payments. That should answer my question in the OP but I'm leaving the thread open for discussion

They cannot ban Monero because it is decentralized.

So the simple solution is to decentralize coinjoins. Make it like Mastodon where anybody can run their own federated server which sends data (in this coinjoins) between other servers.

The government was only able to take down Samourai wallet because they were centralized.

All decentralised tech needs Devs.

Weren't Samurai Devs utilizing pseudonyms? And yet there was a huge effort to target them even abroad.

Samurai tried to develop a decentralised network for conjoin and look what happened to them.

If FEDs threaten physical security of individuals anywhere in the world developing this tech then who's gonna do it?
Maybe it could be done in a state willing to not extradite developers or at least not letting US FEDs operate within its borders. But which country would that be for real now. Iran, North Korea? I don't see it.