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A software developer named Keonne Rodriguez is currently sitting in a federal prison, prepared to serve five years. He didn't steal anyone's money. He didn't hack anything. All he did was build software that helped people keep their Bitcoin transactions private. And now he's doing time for it. But what makes this case INSANE, is that the government's own financial regulator told prosecutors that what he was doing WASN’T illegal.

They had it in writing, in an email, six months before they arrested him. But the prosecutors charged him anyway, and they hid that information from the defense for over a year. I want to break down what actually happened, why the feds went after this guy so hard, and what this case means for anyone who thinks that they have a right to financial privacy.

First, let’s discuss TD Bank, because there's a comparison that I'm going to keep going back to, and I want you to keep it in mind while you read this story.

In October of 2024, TD Bank admitted to laundering hundreds of millions of dollars for drug cartels. Their employees took bribes to look the other way. Over $57,000 in gift cards were given to employees just to process the dirty money. The bank left $18 trillion in transactions completely unmonitored and criminal networks moved over $670 million through their system. TD Bank was ordered to pay a fine of $3 billion.

But guess how many executives went to prison for this? Zero.

Now, let's talk about how Bitcoin works. A lot of people think Bitcoin is anonymous, but it's actually the opposite. Bitcoin is one of the most traceable forms of money ever created. Every Bitcoin transaction gets recorded on something called the blockchain. You can think of it like a giant public spreadsheet that anyone in the world can look at. Every transaction, every amount, every wallet address all permanently recorded and visible to anyone.

But your wallet address isn't your name. It's just a long string of random letters and numbers. But if you can be linked to a specific wallet, then every transaction you've ever made with that wallet, can be seen. Where the money came from, where it's been, how much, when... So your entire financial history is right there permanently for anyone to see.

So Keonne and his co-founder William built Samourai Wallet. And Samourai Wallet had a feature that allowed you to break that chain of traceable transactions.

Let's say you and nine other people have one Bitcoin and all of you want more privacy. Whirlpool, a feature of Samourai Wallet, would coordinate a single transaction where all 10 of you put your Bitcoin in and then all 10 of you pull 1 Bitcoin out. You still have one Bitcoin, but now it's not the same Bitcoin you started with. It got swapped around with everyone else's. So if someone is tracing your transactions, the trail goes cold at that swap.

This is the important part. Because this is Keonne and his co-founder's whole argument. Nowhere in that transaction did Samourai ever take custody of that Bitcoin. The users held their own private keys the entire time. Private keys are basically the passwords that control your Bitcoin. If you have the keys, you control the coins. Samourai never controlled those keys. They just wrote the software to coordinate the transactions between parties.

Keonne said this publicly back in 2021. He said users are entitled to use this type of tool. It's just a collaborative transaction. He said it only gets iffy if you're taking custody. Then you're a money transmitter and you need a license. But he said we aren't transmitting money because we never hold the keys. This distinction really matters because under the law, transmission requires that you hold the funds. And if you're holding the funds, you're required to have a license. But if you're just providing software and the users control their own money the entire time, the argument is that you're not transmitting anything.

And this was Samourai's position. For nearly a decade, Samourai operated without any issues. Over $2 billion in Bitcoin flowed through the mixing service. It had loyal users, from privacy advocates, human rights activists, journalists, to just regular people who didn't want their financial lives exposed to the world.

Then came April 24th, 2024. Federal agents arrested Keonne at his home in Pennsylvania. His co-founder Hill got picked up in Portugal and extradited to the U.S. The Department of Justice seized their servers and shut the whole operation down. They were hit with charges for conspiracy to commit money laundering and operating an unlicensed money transmitting business.

This was the prosecution's position. They said over $237 million that passed through Samourai was allegedly connected to criminal activity. They said it involved drug trafficking, darknet markets, fraud schemes. They also claimed that funds came from child pornography. All of this is horrifying. It's a terrible list being attributed to Samourai and its founders.

The prosecutors had one piece of evidence that seemed like a slam dunk. It was a WhatsApp message from Keonne describing mixing as money laundering for Bitcoin. The government wasn't accusing them of stealing money or participating in any crimes. But it seems that they were essentially saying that building a tool that can be misused is a crime. And that raises a bunch of questions. If you build a road that criminals happen to operate on and use, does that make you liable for their crimes?

But check this out. In August of 2023, six months before they arrested Keonne and his co-founder, prosecutors at the Southern District of New York reached out to FinCEN. Now, FinCEN is the Financial Crimes Enforcement Network. They're the Treasury Department's agency that actually writes the rules on what counts as money transmission. They asked FinCEN a simple question: is Samourai Wallet a money transmitter that needs to be licensed?

And FinCEN said no.

In an internal email among the prosecutors, these exact words were written: "Because Samourai does not take custody of cryptocurrency by possessing the private keys to any addresses where the cryptocurrency is stored, that would strongly suggest that Samourai is NOT acting as an MSB." MSB is short for Money Services Businesses. The "not" in this email was in capital letters.

So that's in the prosecutor's own words. The government's own regulator saying Samourai doesn't need a license because they never held any of the keys. But the founders were charged anyways.

This information was hidden from the defense for over a year. When it finally came out in May 2025, the defense attorneys were obviously furious. They said this is Brady material, meaning it's evidence that could prove someone's innocence and prosecutors are legally required to turn it over. But they didn't.

A researcher at the Bitcoin Policy Institute said that if prosecutors can ignore the regulator, conceal the contradiction and press felony charges anyway, no entrepreneur can rely on the government's own guidance.

So once they were charged, Keonne and Hill faced 25 years if they lost that trial. 25 years for just writing code. They were faced with a choice-either fight it and risk everything or plead guilty to a lesser charge and cap their exposure at five years. In July of 2025, they both took the deal. And I get it. If you're facing five or 25 on a gamble, the decision tree looks a little different.

The judge gave Keonne the max, five full years. And he gave his co-founder Hill four years. Hill's 67 years old.

Let's go back to TD Bank. TD Bank admitted to a conspiracy to commit money laundering. Their employees literally took bribes to help drug cartels move dirty money. They left $18 trillion in transactions completely unmonitored over nearly a decade. And criminal networks moved $670 million through their accounts. The prosecutor in that case said that TD Bank had "made itself convenient for criminals."

That's the exact same language that they used against Samourai Wallet. So what's the difference here? I see one got a fine and the other got a prison cell.

This one case isn't just about one software developer. It's about what kind of financial system we're building. After Samourai was shut down, other privacy-focused Bitcoin companies panicked. Wasabi Wallet blocked all US users. Phoenix Wallet pulled their app from the American app stores entirely.

The message that was sent from the government was clear. If you build privacy tools in this country, you're a target.

The Cato Institute warned that this prosecution could have a chilling effect on cryptocurrency defenders. I mean, think about who actually needs financial privacy. Dissidents living under authoritarian regimes, domestic abuse survivors trying to hide assets from abusive partners, journalists protecting sources, and just regular people who don't want corporations tracking every single purchase they make.

When privacy gets criminalized, the vulnerable suffer the most. The actual criminals will always find another way.

But there's still hope for Keonne and his co-founder. In December of 2025, a reporter asked President Trump if he would consider pardoning the two. Trump said he'd look into it and told Attorney General Bondi to review the case.

At the end of the day, this all comes down to one question. Who gets to decide how much privacy you're allowed to have with your own money?