U.S. Regulators Jail Crypto Mixer Founder in Anti-Laundering Push

William Lonergan Hill, co-founder of the cryptocurrency mixing service Samourai Wallet, was sentenced to four years in prison on Wednesday by a U.S. District Court in Manhattan for his role in operating a service prosecutors allege laundered over $237 million in illicit funds. The sentence, one year below the maximum five-year term for conspiring to operate an unlicensed money transmitting business, follows a guilty plea in July and aligns with broader regulatory scrutiny of crypto mixers. Hill, 67, and his colleague Keonne Rodriguez, Samourai's CEO, were also ordered to pay $250,000 in fines each and have already forfeited over $6.3 million.

The case marks one of the few high-profile prosecutions of crypto mixing services under the Trump administration and underscores federal authorities' commitment to enforcing anti-money laundering laws in the digital asset space. U.S. Attorney Nicolas Roos emphasized that the sentences "send a clear message" that laundering criminal proceeds-whether in fiat or cryptocurrency-will face "serious consequences" according to prosecutors. Judge Denise Cote, who presided over the trial, described the crime as "very serious," noting the harm caused to "countless victims" whose identities Hill would never know.

Samourai Wallet, a Bitcoin mixing service, allowed users to obscure transaction trails, a feature prosecutors argued was knowingly exploited to hide funds from illegal dark web transactions. The service's operations drew comparisons to Tornado Cash, another mixing service whose developer, Roman Storm, faces ongoing legal challenges. While Storm's trial resulted in a mistrial on key charges in August, prosecutors continue to push for conviction on conspiracy-related counts. The Samourai case, by contrast, proceeded under a plea deal that spared Hill and Rodriguez the risk of a jury trial.

Hill's defense team sought leniency, citing his age, health, and the precedent of Trump-era pardons for crypto figures like Ross Ulbricht and Changpeng Zhao. They argued that home confinement would suffice given Hill's "quiet retirement" plans in Portugal. However, Cote rejected the request, stating that the sentence was necessary to deter similar activities according to court records. Rodriguez, who received a five-year term in August, has yet to appeal.

The sentencing has sparked debate within the crypto community about the balance between privacy and regulation. While privacy tools are often marketed as essential for user security, regulators increasingly view them as conduits for illicit activity. The U.S. Department of Justice's recent guidance, which sets higher bars for prosecuting crypto service providers, contrasts with the aggressive enforcement seen in the Samourai case. Critics argue that such actions could stifle innovation, while proponents say they are necessary to prevent financial crime according to industry experts.

Globally, crypto regulation remains a patchwork of policies, with countries ranging from outright bans to welcoming frameworks. The U.S. has taken a middle path, with the Trump administration rolling back some enforcement actions while enacting laws like the Genius Act to regulate stablecoins according to regulatory analysis. The Samourai case highlights the tension between fostering innovation and ensuring compliance, a challenge that will likely intensify as digital assets grow in prominence.

For now, Hill's sentence serves as a cautionary tale for developers of privacy-focused tools. As prosecutors and regulators continue to target unlicensed services, the line between legitimate innovation and criminal facilitation grows increasingly contested according to crypto analysts. The outcome may influence how other mixing services navigate compliance, with some potentially opting for licensing or altering their operations to avoid legal exposure.