Another founder of a crypto privacy tool is heading to prison. William Lonergan Hill, the 67-year-old co-founder of Samourai Wallet, received a four-year sentence on Wednesday. The charge was operating a crypto mixing service that prosecutors said was a laundromat for criminals.
- Samourai Wallet co-founder William Lonergan Hill was sentenced to four years in prison for operating a crypto mixing service deemed a criminal laundromat. This follows a similar five-year sentence given to CEO Keonne Rodriguez just two weeks prior.
- Both founders pleaded guilty in July after initially denying charges, and they face three years of supervised release and $250,000 fines each, in addition to over $6.3 million in forfeitures already paid.
- The case highlights the ongoing legal battle over privacy tools like crypto mixers, with prosecutors arguing Samourai was intentionally used to transmit criminal proceeds, contrasting with privacy advocates who see them as vital for protection.
The sentence was handed down in a New York federal court. It follows a similar fate for his colleague, Keonne Rodriguez. Just two weeks ago, Rodriguez, the company’s CEO, was given the maximum five-year penalty. Hill served as the chief technology officer.
This wasn’t a surprise verdict from a long trial. Both men changed their pleas to guilty back in July. They had initially denied the charges filed against them last year. The change of heart came with a heavy price.
Beyond the prison time, both Hill and Rodriguez face three years of supervised release. They were each ordered to pay a $250,000 fine. Prosecutors also noted that the pair has already paid more than $6.3 million in forfeitures. The numbers are big. The message is bigger.
U.S. Attorney Nicolas Roos put it plainly. “The sentences the defendants received send a clear message,” he said. The message is that laundering criminal proceeds will bring serious consequences, no matter the technology used.
A Tool for Privacy or a Criminal Hideout?
So what exactly did Samourai Wallet do? It was a “crypto mixer.” Think of it as a digital service that takes your bitcoin, tumbles it together with bitcoin from many other users, and then spits it back out to a new address. The goal is to break the chain of ownership on the public blockchain, making the funds harder to trace.
For privacy advocates, this is a vital tool. It protects financial history from prying eyes. It allows people in oppressive regimes to transact freely. It’s a digital version of drawing the curtains at home.
For law enforcement, it’s a black box. Prosecutors argued Samourai was “designed and operated as a service for transmitting criminal proceeds.” They said Hill and Rodriguez knew exactly how their app was being used to “wash millions in dirty money.”
This isn’t an isolated case. The legal spotlight has been shining brightly on mixers for a few years now. The most famous example is Tornado Cash. Its developer, Roman Storm, was charged in 2023 with similar offenses.
Storm’s trial had a more complicated outcome. In August, a jury found him guilty of operating an unlicensed money transmitting business. But they couldn’t agree on the more serious money laundering and sanctions charges. It was a partial victory for both sides, which means a full victory for neither.
The Line Between Code and Crime
This brings us to the heart of the debate. Where does a software developer’s responsibility end? Is writing the code for a privacy tool a crime if someone else uses it for illegal acts?
Last August, a Justice Department official tried to offer some clarity. Matthew J Galeotti, an acting assistant attorney general, said that “writing code” is not a crime. The statement was meant to reassure developers who were watching the Tornado Cash case with alarm.
Yet, here we are. The founders of Samourai Wallet are going to prison for operating the service their code created. The distinction seems to be between simply publishing open-source code and running a business that profits from it, especially if you market its privacy features to the wrong crowd.
The crypto community is pushing back. Advocates have been raising money for Roman Storm’s legal defense. Over 100 crypto companies and organizations have urged lawmakers to protect software developers from being held liable for how their creations are used by others.
They argue that holding a coder responsible for the actions of a user is like jailing the inventor of the hammer for every nail used in a crime. It’s a difficult argument to settle, and the courts are becoming the primary battlefield.
The sentences for Hill and Rodriguez show that prosecutors are winning some of these battles. They successfully argued that the founders weren’t just passive code writers. They were active operators of a financial service that, knowingly or not, catered to a criminal element.
For now, the line remains blurry. The government insists it’s not targeting coders. But the sight of developers receiving multi-year prison sentences sends a chill through anyone building tools that put user privacy first. The question of what you can build, and how you can build it, is now being answered by judges and juries.
