US intensifies battle against crypto privacy protocols following crackdown on Samourai Wallet

The founders of Samourai Wallet were arrested and charged with $100 million in money laundering.
Allegations against Samourai's wallet sound a huge warning to other privacy protocols.
Privacy tokens could suffer a huge crash due to increased legal actions by the US government.

CEO Keonne Rodriguez and CTO William Lonergan of Samourai Wallet were arrested by the US Department of Justice (DoJ) on Wednesday and charged with $100 million in money laundering on a count and illegal money transmitting on another count. This move could see privacy-focused cryptocurrencies take a dip.

Also read: Binance founder Changpeng Zhao could face three-year jail time

Samourai wallet founders arrested

The DoJ accused Samourai Wallet of executing $2 billion worth of transactions unlawfully, and with prosecution fast approaching, the founders of the wallet look to face 25 years in prison.

Both men were arrested in the early hours of the day. Lonergan was apprehended in Portugal and is expected to be in US custody soon. This action is part of the US government's recent measures against encrypted transactions.

"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," said US Attorney Damian Williams.

There are currently 10,868 BTC worth about $700 million in Samourai wallets as of the time of writing.

The allegations against Samourai Wallet sound a huge warning to other privacy protocols. The likes of Monero, Blockbend, and Railgun may need to be on the lookout for the government, as the threat of getting locked up is growing stronger.

It's interesting to note that Samourai's predicament occurred on the same day the European Parliament voted to adopt new laws enhancing "due diligence measures and checks on customers' identity."

Also read: Binance and Huobi among exchanges warned in India for AML and CFT framework oversight

The action of the DOJ against Samourai founders has stirred reactions from the crypto community, and many shared their displeasure with the government and accused them of plotting to control the cryptocurrency landscape.

Ryan Sean Adams of Bankless podcast expressed his disappointment about the arrest on X:

The developers of Samourai were arrested this morning.

One extradited from Portugal.

Samourai is a bitcoin wallet that makes bitcoin private.

These developers face up to 25 yrs in prison for writing code.

The US is sending a message.

No transaction will be private. pic.twitter.com/GupLtMuHD8
— RYAN SΞAN ADAMS - rsa.eth (@RyanSAdams) April 24, 2024

This follows recent actions by Ethereum co-founder Vitalik Buterin, endorsing the need for privacy in online interactions.

He also recently transferred 100 ETH ($325,000 at the time) to the Railgun privacy protocol.

This is bad.

Crypto is not just about trading tokens, it's part of a broader ethos of protecting freedom and privacy and keeping power in the hands of the little guy.

And these values unfortunately continue to be under attack, globally. https://t.co/iFM932IBP6
— vitalik.eth (@VitalikButerin) April 20, 2024

With the US targeting increased legal actions at crypto privacy protocols, privacy-based tokens could dip in the coming weeks.

As a result, it won't be surprising if many investors start taking precautionary measures by selling privacy tokens.

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