- Samourai Wallet CEO Keonne Rodriguez discussed his conviction before reporting to prison.
- His sentence includes five years in prison, three years of supervised release, and a $250,000 fine.
- The case tests how far U.S. authorities can apply money-transmission laws to non-custodial privacy tools.
Samourai Wallet CEO Keonne Rodriguez warned that U.S. enforcement actions may reshape how Bitcoin privacy tools are treated under federal law.
He spoke about his case in a Coin Stories interview before reporting for a five-year prison sentence tied to an unlicensed money-transmission conspiracy charge.
Test for Non-Custodial Bitcoin Tools
Rodriguez and his co-founder developed Samourai Wallet in 2015 as a Bitcoin wallet that lets users keep control of their funds. Its privacy feature, Whirlpool, aimed to break transaction links on the public blockchain.
The tool used a method that allowed users to send coins between addresses they controlled, rather than handing funds to a third-party operator.
Related: US Court Overturns Sanctions on Crypto Mixer Tornado Cash
That design became a central point in the case. Since 2013, the U.S. Financial Crimes Enforcement Network (FinCEN) has said that money transmitters are businesses that take custody of customer funds.
The agency repeated in 2019 that non-custodial privacy tools do not meet that definition. According to court documents, prosecutors contacted FinCEN before filing charges and were told Samourai did not appear to fit the money transmitter category.
Despite that guidance, federal prosecutors pursued charges under a conspiracy statute. They argued that Whirlpool operated as an unlicensed service that handled criminal proceeds, citing an internal message and online comments from earlier years of the project.
Rodriguez disputed the interpretation but accepted a plea deal to avoid the risk of a longer sentence.
How Prosecutors Applied Money-Transmission Laws
The case highlights how prosecutors may apply money-transmission rules beyond custodial platforms such as exchanges.
In court filings, the government argued that privacy tools can be treated as transmitters if they play a role in moving illicit funds, even when users control their own keys.
That approach differs from earlier regulatory guidance that separated software providers from custodial financial services. It also raises questions about how much responsibility developers have for how people use open-source tools.
Rodriguez said he expected the case to hinge on the custody issue, but a judge denied the defense’s motions, including one based on communications with FinCEN. The plea followed soon after. His sentence includes five years in prison, three years of supervised release, and a $250,000 fine.
Implications for Bitcoin Privacy
The Samourai Wallet case comes amid increased pressure from law-enforcement agencies on privacy services, including mixers and coin-control tools built into non-custodial wallets.
Blockchain analysis firms have expanded their capabilities, and regulators have pushed for broader oversight of digital asset activity.
The ruling does not define new legal standards, but it shows that prosecutors may pursue cases even where existing guidance appears to exempt certain tools. Developers of privacy-focused software are now watching to see whether other courts adopt similar interpretations.
Related: DOJ Aims to Stamp Out Money Laundering by Focusing on Crypto Mixers and Exchanges
Notably, Rodriguez’s conviction leaves unresolved questions about how the U.S. will treat privacy features on public blockchains. Congress has not updated money-transmission laws to address decentralized tools, and courts have offered limited clarity.
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