Samourai Wallet founders have been charged with money laundering and operating an unlicensed business.
Keonne Rodriguez, one of the co-founders, was released on a $1M bond after pleading not guilty in NYC court.
The legal proceedings raise concerns about the future of non-custodial crypto services in the U.S.
During an appearance at the U.S. District Court for the Southern District of New York on Wednesday, Samourai Wallet co-founder Keonne Rodriguez entered a plea of not guilty to the charges brought against him and his associate William Hill and an assistant U.S. Attorneys agreed to the $1 million bond, with travel restrictions.
The lawsuit against Rodriguez and his associate William Hill alleges that Samourai Wallet facilitated over $100 million in money laundering transactions from illegal dark web markets. The two were arrested on April 24 in different jurisdictions.
Keonne Rodriguez’s bail terms
Despite being released on a $1 million bond, Rodriguez was restricted to only travel to certain areas of New York and Pennsylvania. He will be confined to his residence in Harmony, Pennsylvania, and required to wear a location monitoring device.
Additionally, Rodriguez is prohibited from engaging in any cryptocurrency transactions without prior approval from the court.
Rodriguez’s case is scheduled to proceed in the Southern District Court of New York, with Rodriguez set to appear again on May 14 with the involvement of Judge Richard M. Berman, known for presiding over high-profile cases, adding to the weight of the proceedings.
The outcome of the legal proceedings against could have far-reaching implications for the cryptocurrency industry.
William Hill, the co-accused and chief technology officer of Samourai Wallet, despite being arrested on the same day as Rodriguez has not yet been presented in a any U.S. courtroom. This could be because of Hill having been arrested in Portugal meaning authorities are possibly working through extradition proceedings.
Implications of the Samourai Wallet legal proceedings
The arrests and subsequent legal proceedings against Rodriguez and Hill have sparked debates regarding the definition of non-custodial wallets as money service businesses.
The allegations of Samourai Wallet facilitating money laundering transactions from illegal dark web markets raise questions about the broader implications for self-custodial tools in the cryptocurrency ecosystem.
As reported earlier, Self-custodial crypto wallets like Wasabi Wallet and Phoenix have gone ahead to restrict U.S. users fearing legal proceedings following the arrest and prosecution of the Samourai Wallet founders and a possible Metamask investigation.
The case challenges the interpretation of guidelines issued by the Financial Crimes Enforcement Network (FinCEN) regarding money transmission services with the Department of Justice (DOJ) arguing that the operation of Samourai Wallet’s services, including the broadcasting of transactions and collection of fees, falls within the scope of a money service business.
The indictment also raises concerns about potential efforts to KYC (Know Your Customer) the Bitcoin network, with implications for miners, node operators, and other entities involved in cryptocurrency transactions.
The FBI has already issued a public service announcement urging caution regarding cryptocurrency money service businesses that do not require KYC information.
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