A announcement It was announced today by the Department of Justice that Keonne Rodriguez and William Hill were arrested and charged with operating Samourai Wallet, “an unlicensed money transfer business” that executed “illegal transactions.”
Fuck the Department of Justice, period. At no time did Samourai hold user funds, have control over user funds and ESPECIALLY did not execute any transactions on behalf of the user. It is a completely self-contained wallet in all respects. From day one, they have been completely uncompromising with every feature they have ever implemented.
They are charged with conspiracy to commit money laundering, with a maximum sentence of 20 years, and one count of conspiracy to operate an unlicensed money transmitting business, with a maximum sentence of five years.
This is literally insane.
Let's look at some language used in the press release regarding the arrests:
“Samourai illegally combined several unique features to execute anonymous financial transactions valued at over $2 billion for its customers.”
What the fuck does that mean? “Illegal combination of several unique characteristics”? They wrote source code that juggles 1s and 0s and puts them together in a certain arrangement? They wrote a computer program that simply creates pieces of data on users' devices, their own property, and signs them with a cryptographic key before sending them over the Internet for other people's computers to download and view. voluntarily? Maybe transfer 1s and 0s to someone else's computer?
It's a right protected by the first amendment. Complete shutdown. Writing and publishing source code is freedom of expression. The whole absurd argument that “illegally combining unique characteristics” basically boils down to “you spoke wrong.” It's not legal. They literally implicitly state that certain types of speech, or combinations of speech, are illegal. It's crazy.
“These private keys are not shared with Samourai employees, but Samourai operates a centralized server which, among other things, supervises and facilitates transactions between Samourai users and creates new BTC addresses used during transactions.”
Samourai does not create addresses for users, but their own wallets do. Complete stop. Samourai's servers do not participate in generating addresses for users. This is a factually incorrect statement. Additionally, the phrase “supervises and facilitates” transactions is very intentional wording. They ultimately have no control over the transaction construction process other than being a passive message carrier. At no stage in this process do they take control of the transaction constructed by the users, with the final destination of the transactions (which belong to them) being decided entirely by the users. The authorization of the transaction is approved solely and exclusively by the users themselves.
At no point in the process of users constructing a transaction does Samourai gain any control over user funds, any influence over where those funds are spent, or the ability to prevent funds from being of these users can be spent where and when they want.
The press release goes on to specifically name Whirlpool and Richochet as the two features in question. The fact that Ricochet is classified, or at least implied, as a form of money laundering or some sort of illegal transaction structure in the first place is insane. Richochet is literally just a series of transactions in a chain that sends you money over and over again.
It looks like this:
Literally every existing wallet for Bitcoin is capable of creating a personal spending chain like this. Each of them. You just keep sending your own Bitcoin to a new address in the wallet, over and over again. Is this money laundering? It's illegal ? Is it illegal to spend my money on myself, not transact with an external entity, or interact with another party? Get laid. This is absolutely insane. So, do all wallet providers facilitate money laundering? Is this the crazy path they are going to try to take, setting a precedent with this case?
Now Whirlpool, their co-coordinator. He claims that Samourai's server coordinates “cryptocurrency trading batches” between groups of users. Incorrect, period. No one sends money to anyone else in a Whirlpool attachment. Each user involved is return their own money. There is no transfer of funds from one user to another. Complete shutdown. Trying to describe this as facilitating the transfer of funds between users is technically incorrect, it's wrong. ALL coinjoins are users sending each other their own money, i.e. their own spending.
Funny how they didn't mention STONEWALL or STONEWALL2x, purely peer-to-peer coins that actually facilitate payments between users. I'm sure the fact that Samourai literally has no involvement in these transactions, being purely coordinated between users without involvement of the Samourai server. Twisting Whirlpool's coins and trying to present it as a real money transfer is probably just a coincidence, and doesn't greatly distort technical realities, given that STONEWALL exists. They're just confused.
In the indictment itself, they also claim that “Samourai”, without distinction between user wallets in which Samourai itself does not participate in the operation and the back-end servers that they operate, “automatically mixes the results”. No. User wallets must be manually connected by the user to the backend coordinator, and after the user initiates and authorizes it to remixthe user's software independently participates in the process of proposing chunks of transactions and authorizes the signing of the resulting transaction if it meets the conditions authorized by the user.
They also claim in the indictment that Samourai “as a money transmitting company” had an obligation to enforce KYC and AML regulations on its users. This is not a money transmission company. Complete shutdown. At no time do they take custody, control or the ability to carry out unilateral transactions with user funds themselves. Claiming that they are a money transmitting company and have an obligation to collect and enforce KYC and AML regulations for their users is like claiming that every self-custodial wallet and service in the entire this ecosystem falls under the auspices of money transmission regulations. .
This is beyond crazy and goes completely against everyone. past clarification from FinCEN about this question.
Samurai is not a money transmission company. Complete shutdown. All they provide, in all their services listed in their indictment, is “delivery, communications or network access services used by a money transmitter to support money transfer services;.” FinCEN specifically and unambiguously clarified in 2019 that the types of services offered by Samourai are not money transmitters.
Every aspect of this case describing their services and products as a money transfer, in which they act as a money transmitter on behalf of others, is completely inconsistent and out of alignment with the reality of how this technology works . This is an insidious and manipulative attempt to use them as an example to set a precedent that purely non-custodial tools and services fall under money transfer services. where the regulatory agency whose mission is to manage these definitions and relevant regulations has explicitly clarified, they do not fall under this definition.
This whole affair is absolute nonsense and should be loudly denounced as such. The precedent this can set for all self-guarding tools is completely insane and cannot be allowed to happen. The bullshit of Twitter feuds and old drama doesn't matter right now, the reality of the senseless excess of the United States government.
If you haven't grown up yet, now would be a good time to do so. The serious issues like this that we'll be dealing with this cycle are infinitely more important than stupid Twitter drama.