Bitcoin affected as U.S. DoJ charges Samourai Wallet founders – Why?

• U.S. DoJ charges against BTC-focused Samourai Wallet founders elicit mixed reactions.
• BTC’s recovery stalled after the development, reversing early week gains. 

Samourai Wallet, a Bitcoin [BTC]– focused wallet and mixer, is the latest victim of the U.S.’s heightened clampdown on crypto mixers in an attempt to curb illicit finance through crypto. 

The U.S. DoJ (Department of Justice) has charged Samourai Wallet mixer founders, Keonne Rodriguez and William Lonergan Hill for operating an unlicensed money transmitter business and money laundering. 

In a press release

“These charges arise from the defendants’ development, marketing, and operation of a cryptocurrency mixer that executed over $2 billion in unlawful transactions and facilitated more than $100 million in money laundering transactions from illegal dark web markets, such as Silk Road and Hydra Market.”

The statement cited X (formerly Twitter) posts by accounts linked to Samourai Wallet and the founders as part of the indictment. 

Privacy under attack? BTC recovery stalls

However, the founder of on-chain analytics CryptoQuant, Ki Young Ju, viewed the arrest against Samourai wallet founders as misplaced instead of going for “real” criminals. He quipped

“The U.S. DOJ has arrested pioneers in #Bitcoin privacy technology. Privacy stands as a core value of Bitcoin. Mixing itself is not a crime. Even crypto exchanges use mixing to safeguard user privacy. It’s like punishing the inventor of the knife instead of the one who uses it.”

Crypto mixers enhance the privacy of cryptocurrency transactions and are very welcome. This is especially true as Google can now track some blockchain addresses and associated transactions. 

Ethereum [ETH] founder Vitalik Buterin also prefers crypto mixer Railgun and recently defended his action, stating that “privacy is normal.”

Similarly, Stacks Co-founder Muneeb Ali reiterated Buterin’s stance on Samourai Wallet founders’ legal woes. He emphasized, 

“Privacy should be normal, not illegal.”

However, crypto mixers also make it challenging to track illicit transactions and have been one of criminals’ preferred money laundering methods. Tornado Cash was recently sanctioned because of that. 

Yan Pritzker of Swan Bitcoin’s reaction to Samourai Wallet was mixed. He defended the founders for offering privacy tech to Bitcoin, noting that, 

“Samourai were trying to do the right thing to provide privacy tech for many legitimate people. Criminal use is a small fraction of mixing use. The merchant where you spend your Bitcoin shouldn’t know how much Bitcoin you own.” 

However, Pritzker also castigated the founders for poking the U.S. DoJ and highlighted that, 

“But they were wrong to go around promoting a service to criminals, and the design using a centralized coordinator run by a company was an obvious SPOF and was predictably attacked after they kept poking the bear.”

BTC recovery has since stalled as the price dropped below $67K, hours after the development. As of writing, BTC barely held the $64K level.