U.S. prosecutors want 5 years for Samourai Wallet founders

[Viscore]

https://cryptonews.com/news/us-prosecutors-seek-maximum-five-year-prison-term-for-samourai-wallet-founders/

Honestly, it’s not even surprising anymore that privacy wallets and mixers like Samourai are being targeted. The U.S. prosecutors are now asking for 5 years in prison for the founders, saying their app helped move over $200M in illegal funds.

Thing is, Samourai was non-custodial, users kept their own keys. But still, the devs got charged for running an unlicensed money transfer service, just because the tool was used by people trying to stay private.

It’s kinda funny how the government keeps saying they support “financial freedom,” yet they go after anything that gives users real privacy.
At this point, it feels like if you build anything that hides transactions, you’re automatically labeled as helping criminals.

Not shocked at all, just another example of how crypto privacy is slowly being crushed.

[ABCbits]

Thing is, Samourai was non-custodial, users kept their own keys. But still, the devs got charged for running an unlicensed money transfer service, just because the tool was used by people trying to stay private.

In addition, their CoinJoin technology is also non-custodial. Unfortunately they used to invite group who sanctioned by US government[1], which give government justification that punish people who create privacy-enhancing technology.

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

[Viscore]

Thing is, Samourai was non-custodial, users kept their own keys. But still, the devs got charged for running an unlicensed money transfer service, just because the tool was used by people trying to stay private.

In addition, their CoinJoin technology is also non-custodial. Unfortunately they used to invite group who sanctioned by US government[1], which give government justification that punish people who create privacy-enhancing technology.

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

Even if they didn’t actually “invite” those sanctioned groups, it’s still possible that the platform was used for money mixing since it’s open to everyone. Once it’s public and anyone can access it, the devs can’t really control who uses it.

So in that sense, yeah, they can still be charged, especially if the authorities see that the service was knowingly allowing transactions linked to sanctioned entities. That’s how governments build their case, not necessarily because the devs invited anyone, but because they didn’t prevent it.

[betswift]

^ Agreed.
They need a casus belli regardless, and they found the one.

[Z390]

This makes no sense to me, if this privacy thing is a problem why are they allowing zcash CEO to shill privacy coin? Right now Dash, Zcash and many others are pumping while everything else is dumping even Bitcoin.
Samurai did have a mixing feature if I remember correctly, maybe that's why they are after them or what? The use of mixer, can we call it privacy? If yes they have no right to go after this company, this is a display of misusing power.
I don't believe anything anymore in this crypto space, most of the time every steps taken is a power struggle, I pity those who still believe that crypto space is the same as the 2018 days, it's more like political driven now.

[nemesis_incarnate]

^ If you don't comply or even have a possibility of crossing the principles from above - you are on the list to get targeted That's the gov for you.

[satscraper]

Not shocked at all, just another example of how crypto privacy is slowly being crushed.

But I’m shocked because this means that any wallets and tools that are armed with the  privacy-focused techniques could face legal scrutiny in certain jurisdictions. In this regard, I’m curious if wallets that dare to implement the silent payments are at risk. After all, these wallets create for government the privacy tension that is similar to, if not more pronounced than, the tension caused by mixing services.

[Z-tight]

This case and that of Tornado Cash's founder, Roman Storm sets a very dangerous precedent. Roman storm, just like Samourai developers was convicted of conspiracy to operate an unlicensed money transmitting business. However, neither service was custodial and none of them held customer funds.

Now, what does this mean for other developers who simply write open source code and develop open source softwares. And how do the authorities define 'money transmitter' right now. These questions are very important, because judging by these separate cases, any blockchain developer could be arrested and convicted based on what the general public does with the software they created. Pathetic!

[Ucy]

Choose between hiding your your identity while your assets are transparent (in the case of Bitcoin Network), or revealing your identity while your assets are hidden (in the case of physical world).

It's too risky to have both (hidden identity and hidden assets) in a world where evil still exists.

In physical world, it's normal to notice or track people when they are moving around to buy, sell, visit, rob etc. If crime happens, the cops are able to find the criminals based on CCTV footage or by asking the public for witnesses.

On Bitcoin Network, we should be able to track transactions since users are anonymous..
Therefore, the transparency of the Bitcoin transactions/network should be adhered to

[PrivacyG]

I am honestly surprised to see how many Privacy supporters are still publicly talking from the United States thinking there would be no consequences.  Or maybe the consequences are nothing to them.  After all, if Privacy means jail time then maybe jail time will soon sound more fun than 'freedom'.  In the mean while, Ross Ulbricht got pardoned by Donald J Trump himself.  It was a victory.  Or was it?  Because now it looks like Trump used Ross only to get more votes in.  In my opinion based on the limited knowledge I have about the case, Samourai did not do any thing worse than Ross did.  Do they deserve a pardon then too?

Maybe it is time for the founders to write Trump a letter.  If Trump did not make Bitcoin great again, giving people like Ross their freedom back is still something.  Even if it is only done for the image of his Presidency.

[Hamza2424]

This makes no sense to me, if this privacy thing is a problem why are they allowing zcash CEO to shill privacy coin? Right now Dash, Zcash and many others are pumping while everything else is dumping even Bitcoin.
Samurai did have a mixing feature if I remember correctly, maybe that's why they are after them or what? The use of mixer, can we call it privacy? If yes they have no right to go after this company, this is a display of misusing power.
I don't believe anything anymore in this crypto space, most of the time every steps taken is a power struggle, I pity those who still believe that crypto space is the same as the 2018 days, it's more like political driven now.

Hmm you know what you are saying sound funny to me no offense please.

Zcash and other tokens that you mentioned are totally irrelevant to this scenario, Samurai doesn't have any tokens it is a tool, although their can be some similar things, but I don't know what those are in your opinion that you mentioned them here.

Maybe you are frustrated about the pump in zec Idk man.

It is not a mixer for starter, they uses coinjoin technology though, read few posts made before you for better understanding what it is and what happened although this is not new by the agencies they have done this before and this shows that they will do in future too. Man this mean, they are not going easy on developers, because I heard the developers are no longer responsible but maybe that's only in USA. Although they should not be punished, if I am not wrong, they were released before Right?

[WhoYouCantKill]

You are correct, it is obvious how tense the line has been between privacy and regulation. The Samourai case reveals that governments are willing to treat privacy equipments as dangers, even though they are non custodial and don't handle funds directly.
From their side, they view these equipments as means to hide illicit activity, away from the crypto side, it seems like an attack on individual freedom and open source development. It isn't surprising, yet it is worrying, privacy in crypto is now being taken more like it is a crime than right.

[peter0425]

https://cryptonews.com/news/us-prosecutors-seek-maximum-five-year-prison-term-for-samourai-wallet-founders/

Honestly, it’s not even surprising anymore that privacy wallets and mixers like Samourai are being targeted. The U.S. prosecutors are now asking for 5 years in prison for the founders, saying their app helped move over $200M in illegal funds.

Thing is, Samourai was non-custodial, users kept their own keys. But still, the devs got charged for running an unlicensed money transfer service, just because the tool was used by people trying to stay private.

It’s kinda funny how the government keeps saying they support “financial freedom,” yet they go after anything that gives users real privacy.
At this point, it feels like if you build anything that hides transactions, you’re automatically labeled as helping criminals.

Not shocked at all, just another example of how crypto privacy is slowly being crushed.

The fact now is that if you get too big and you offer service to a huge number of people, the government will be alerted and most likely shut you down. At this point it would be better to run privacy platforms and don’t let it get too big or popular. In short, gatekeep those platforms.

[Russlenat]

The fact now is that if you get too big and you offer service to a huge number of people, the government will be alerted and most likely shut you down. At this point it would be better to run privacy platforms and don’t let it get too big or popular. In short, gatekeep those platforms.

The main goal of the business is to go big, and it’s easy to see how the wallet can get popular. But the lack of regulation here also makes it vulnerable to money laundering. And Ignorance of the law won’t save anyone (that's how gov think), you can’t offer something that looks like a financial service without understanding how KYC and AML work. If the government decides to crack down, the devs will be the ones who have to answer for it, even if they never intended the platform to be used for illegal transactions.

[aoluain]

The fact now is that if you get too big and you offer service to a huge number of people, the government will be alerted and most likely shut you down. At this point it would be better to run privacy platforms and don’t let it get too big or popular. In short, gatekeep those platforms.

The main goal of the business is to go big, and it’s easy to see how the wallet can get popular. But the lack of regulation here also makes it vulnerable to money laundering. And Ignorance of the law won’t save anyone (that's how gov think), you can’t offer something that looks like a financial service without understanding how KYC and AML work. If the government decides to crack down, the devs will be the ones who have to answer for it, even if they never intended the platform to be used for illegal transactions.

That seems to be the case alright. Look at the key takeaway's from the article

Key Takeaways:

US prosecutors are seeking the maximum five-year prison term for Samourai Wallet founders.

Keonne Rodriguez and William Hill pleaded guilty to operating an unlicensed money-transmitting business.

The case highlights the US government’s widening crackdown on crypto privacy tools and open-source developers.

Its the CoinJoin / Mixing feature which the government came after Samourai
wallet for as highlighted also on Wikipedia.

https://en.wikipedia.org/wiki/Samourai_Wallet

I dont think its any surprise that they are trying to hand them 5 year sentences,
"Mixers" have been on their target list for a while hence the decision to remove them
from BCT.

Is it fair to say that open source developers working on privacy based wallets
which dont offer mixing are safe?

[Alpha Marine]

From what I've read so far, they haven't been charged for running a non-custodial wallet; they've been charged for the mixing feature they used to invite criminals. Now, because the prosecution said they did it doesn't mean they did; it has to be proven first. But if they did, then they should be punished.

This was including in the filed case
The government’s filing cites a 2018 WhatsApp chat in which Rodriguez called mixing “money laundering for bitcoin.” In 2020 and 2023, Hill allegedly promoted Samourai on dark web forums by claiming it would be “cleaning dirty Bitcoin” and making it “untraceable.”

The motive should be privacy and not to help criminals. Of course criminals will use it, but you don't have to advertise it to them.
We know that the government constantly attacks privacy and look for reasons where there are no reasons to attack, but things like this (if true) gives them more reasons to.

[Synchronice]

Those who live in the US, what's the charge for helping multiple people move millions of dollars in illegal funds? I ask this because I want to understand whether 5 years sentence is a normal sentence or too low. If it's too low and prosecutors demand that, then they don't have a strong case or it's a plea deal to my mind.
By the way, logically, Samourai wallet founders can't be arrested and sentenced for what they are accused of because that accusation is wrong. In order for Samourai Wallet to act as a money transmitter, they should have a sufficient control over the money that's transferred. Since Samourai Wallet is a non-custodial wallet and users control their own keys, the accusation of Samourai Wallet founders for that is wrong and should be discharged.
Just my opinion, nothing else. I'm not a law expert.

[ABCbits]

--snip--

Even if they didn’t actually “invite” those sanctioned groups, it’s still possible that the platform was used for money mixing since it’s open to everyone. Once it’s public and anyone can access it, the devs can’t really control who uses it.

So in that sense, yeah, they can still be charged, especially if the authorities see that the service was knowingly allowing transactions linked to sanctioned entities. That’s how governments build their case, not necessarily because the devs invited anyone, but because they didn’t prevent it.

I agree they'll just find reason. Although my point is the Samourai Wallet founders could have slightly easier time on court if they didn't do that.

This makes no sense to me, if this privacy thing is a problem why are they allowing zcash CEO to shill privacy coin? Right now Dash, Zcash and many others are pumping while everything else is dumping even Bitcoin.

I have no idea about zcash CEO background and activity, but FWIW many CEX already delist zcash.

[DubemIfedigbo001]

Samurai wan deeply invested in lots of privacy features that it was very difficult for the US government to track transactions that went in and out of it, It also had a way of facilitating transactions between Samurai users in which new BTC addresses were created in the process which makes it increasingly difficult to find out funds sent to who. I believe the government frustration is its increased privacy features as well as the claims that the software was being promoted on dark webs between 2020 and 2023 which it is believed that 246.3 BTC was collected in fees.

It is not surprising that privacy is a problem to the government, and they would always find illegal claims to back up their attacks on it. In the case of money laundering, it is done via fiat more than cryptocurrency, but the government would always attack cryptocurrency more because they are very much against privacy. This is more of a war against privacy than it is against sanctioned entities.

[FortuneFollower]

Those who live in the US, what's the charge for helping multiple people move millions of dollars in illegal funds? I ask this because I want to understand whether 5 years sentence is a normal sentence or too low. If it's too low and prosecutors demand that, then they don't have a strong case or it's a plea deal to my mind.
By the way, logically, Samourai wallet founders can't be arrested and sentenced for what they are accused of because that accusation is wrong. In order for Samourai Wallet to act as a money transmitter, they should have a sufficient control over the money that's transferred. Since Samourai Wallet is a non-custodial wallet and users control their own keys, the accusation of Samourai Wallet founders for that is wrong and should be discharged.
Just my opinion, nothing else. I'm not a law expert.

As I browsed the web (not being a law expert too) - it said about 20 years at maximum.. and much more in fines or twice the amount of the illicit funds.

5 years seems to be the average for this kind of cases, depends on specifics of the case.