The co-founders of Samourai Wallet are expected to plead guilty to charges that, through their bitcoin mixing service, they assisted hackers and other cyber criminals in laundering over $100 million in illicit funds, as stated in court filings from Tuesday.
Keonne Rodriguez and William Lonergan Hill initially pleaded not guilty after being arrested and charged with one count each of conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business last April. They face a maximum sentence of 25 years in prison. Their trial was set to begin in early November in Manhattan’s U.S. District Court for the Southern District of New York (SDNY).
However, court orders from District Judge Denise L. Cote indicate that both men will change their pleas to guilty during consecutive in-person hearings on Wednesday.
This decision comes during the ongoing trial of Roman Storm, the developer of Tornado Cash, another crypto mixing tool, held in Manhattan’s Southern District before District Judge Katherine Polk Failla. Storm, along with one of his colleagues, faces the same charges as Rodriguez and Hill, plus an additional charge of conspiring to violate international sanctions. Storm has maintained his innocence and may face up to 45 years in prison if convicted on all counts. Closing arguments in his trial are expected to conclude on Wednesday, after which the jury will begin deliberating.
The reason for Rodriguez and Hill’s decision to change their pleas to guilty remains unclear. A lawyer for Rodriguez did not respond to a request for comment.
The duo has made multiple attempts to dismiss the case against them. Following a memo from U.S. Deputy Attorney General Todd Blanche stating that the DOJ would no longer pursue criminal cases against crypto firms for regulatory violations related to their end users, Samourai Wallet’s attorneys requested the government drop their case. Prosecutors seemingly considered this for two weeks before opting to proceed despite the memo.
Defense lawyers also sought to have the case dismissed after claims emerged that prosecutors withheld evidence suggesting the Financial Crimes Enforcement Network (FinCEN) did not classify Samourai Wallet as a money transmitter, therefore not requiring registration. Prosecutors denied that their late disclosure violated due-process rights, arguing that “legal opinions” do not qualify as Brady material.
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