CryptoQuant CEO Ki Young Ju has voiced support for the founders of Samourai Wallet after their indictment by the U.S. Department of Justice for allegedly running a crypto mixing service implicated in laundering nearly $100 million.
Ju has defended the crypto mixer‘s role in protecting user privacy and argued against the charges brought against the founders.
In an April 25 X thread, Ju said, “The US DOJ has arrested pioneers in Bitcoin privacy technology. Privacy stands as a core value of Bitcoin. Mixing itself is not a crime. Even crypto exchanges use mixing to safeguard user privacy.”
Furthermore, Ju highlighted that the way a feature is used and the intent behind deems it as lawful or illicit. He compared the Samourai wallet case the to usage of a knife, which can both be lawful and illegal. The CryptoQuant founder noted, “It’s like punishing the inventor of the knife instead of the one who uses it.
The DoJ has accused the Samourai Wallet founders, Keonne Rodriguez and William Lonergan Hill, of designing and operating a service that allegedly facilitated over $100 million in transactions tied to illicit activities.
Since its inception in 2015, the service is alleged to have handled about $2 billion in illicit transactions, generating around $4.5 million in fees.
Rodriguez was arrested and is scheduled for arraignment in Pennsylvania, while Hill was detained in Portugal and is awaiting extradition to the U.S. The crackdown extended to seizing the Samourai Wallet website hosted in Iceland and issuing a warrant to remove its mobile application from the Google Play Store.
Evidence from tweets and private messages indicates that the founders actively marketed their service to users looking to launder criminal proceeds. The application, which has amassed over 100,000 downloads, was reportedly targeted towards participants in the black and grey markets, especially during the COVID-19 pandemic.
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Edward Snowden, a noted whistleblower and advocate for digital privacy, also weighed in on the matter, criticizing the DoJ’s actions. On X, Snowden remarked, “The Department of ‘Justice’ has once again criminalized the developers of an app that restores financial privacy. The way to fix this is to make money private by default. Privacy must never be ‘exceptional,’ or they will make it criminal.”
What’s the implied threat here?
Why does an average, law-abiding user seeking privacy need a PSA about something that literally no one properly understands (what is an MSB and what isn’t) at this point.
There is zero reason for me to have considered Samourai Wallet an MSB. pic.twitter.com/763Ycy9Xw1
— Seth For Privacy | Activate LNHANCE (@sethforprivacy) April 25, 2024
Lyudmyla Kozlovska, a human rights advocate, also weighed in on the issue, outlining the capabilities of U.S. law enforcement to detect financial crimes involving cryptocurrencies.
“Since US law enforcement agencies have been able to identify a money laundering offense involving this particular wallet, then they are well equipped to detect such crimes,” Kozlovska stated.
Kozlovska also argued against the criminalization of mixing technologies and the developers behind them, adding, “This is exactly what we talk about in our meetings with regulators: we understand that US law enforcement has all the tools to track Bitcoin transactions on the blockchain.”
Meanwhile, The Federal Bureau of Investigation recently warned Americans against using unregistered cryptocurrency money-transmitting services, which might be aimed at smart-contract-driven privacy tools.
In an April 25 public service announcement, the FBI urged Americans only to use registered Cryptocurrency Money Services Businesses that comply with existing Know Your Customer (KYC) and Anti-Money Laundering (AML) laws.
In its announcement, the FBI wrote that it had recently conducted law enforcement operations against cryptocurrency services that were not licensed in “accordance with federal law,” adding that anyone using unlicensed services could “encounter financial disruptions” during law enforcement actions, particularly if the money is intermingled with illegally obtained funds.
Read more: Crypto mixer Tornado Cash laundered over $550m in 2023 despite sanctions
