The War on Privacy With Bitcoin Continues With the Arrest of the Founders of Samourai Wallet.
The American authorities are trying to make people believe that "money laundering" and "financial privacy" are one and the same thing, constituting a crime.
The news broke yesterday: Samourai Wallet, a Bitcoin privacy service, has been shut down and its founders arrested!
Samourai is a Bitcoin-only noncustodial CoinJoin service that gives users privacy by allowing them to coordinate with other users to mix their funds to break the transaction graph.
If you're unfamiliar with the term CoinJoin, you can read the article I wrote a few months ago about CoinJoin transactions:
The arrest of the founders of Samourai Wallet comes just a few months after the arrest of the founders of Tornado Cash. It's a clear signal from the American authorities against privacy-enhancing services and criminalizing open-source technology development.
The founders of Samourai Wallet have done nothing wrong by running a privacy protocol that enables users to reinforce their privacy. Yet everyone now feels that wanting to take control of their data and privacy is becoming a crime.
According to the DOJ, Samourai:
Was a company-like entity (profited)
Explicitly provided services for privacy
Operated infrastructure directly
Openly advertised to criminals
Had criminal activity traced to the service (including sanctions evasion, which the US war machine particularly doesn't like)
Evidence founders knew about this
Below is a screenshot of the DOJ press release:
I read a lot of people in the cryptocurrency world saying that developers have to leave America to be safe from the DOJ. You should know that the situation is worse than that since the founders of Samourai Wallet have never set foot in America!
But as you know, the extraterritoriality of American law allows the DOJ to strike anywhere in the world. The founders of Samourai Wallet were arrested in Portugal, in Europe... As soon as the DOJ considers that your services may have been used in America by American users and that your services are illegal, you are a potential target accessible almost anywhere in the world.
If you just read the press release and don't dig deeper, you might feel that the DOJ and the American government don't understand how the technology behind Samourai Wallet works. On the other hand, if you dig deeper and read the PDF containing the evidence put forward by the DOJ, you'll probably have a different opinion.
I invite you to read this PDF carefully:
It is probably difficult to know whether the centralized coordinator is really “money transmission” as the DOJ argues. However, the DOJ points to several pieces of evidence demonstrating that the founders of Samourai Wallet encouraged users of darknet markets to use their service. Again, according to the DOJ, the founders marketed it to investors and the public in several tweets.
It is these elements that enable the DOJ to attack the founders of Samourai Wallet, claiming that their service enabled money laundering, even non-custodial.
If you read the PDF and look at the tweets cited by the DOJ, you'll feel, as I do, that this evidence is rather flimsy. Some tweets may or may not have been sarcastic and there are investor materials that reference restricted markets. It seems difficult to put people in jail for 20 years on this evidence alone. The DOJ will have to be able to prove that the founders were aware of what was going on, including the $2B of unlawful transactions and the $100M laundered through criminal transactions.
With all these attacks on privacy-enhancing services, the American authorities would have the general public believe that privacy is a crime.
But it's not a crime. Privacy is normal and good. Privacy by default is the way to go!
The effort currently being made by the authorities is to make people believe that “money laundering” and “financial privacy” are the same thing. By pushing in this direction, the authorities would like the simple act of moving money privately to be considered a crime. As citizens, we cannot agree to this.
What is money laundering? It's when money obtained through a crime is hidden by obfuscating it with clean money. The real crime is the initial crime, which is not financial! Historically, money laundering has involved working with criminals by hand.
What bothers the authorities is that open-source technologies such as Samourai Wallet can make certain transactions private. The authorities aim to associate all private transactions with money laundering. Worse still, the authorities want this to be established even though the developers of these open-source technologies have no connection with criminals.
The authorities are therefore going to pursue these developers using every possible means to accuse them and bring down the technology they are targeting. We can only congratulate ourselves that Satoshi Nakamoto has remained anonymous... If he hadn't, we can imagine that he would already be in prison!
Financial privacy is becoming synonymous with crime in the eyes of the general public when it's not the case.
In any case, the war for privacy will continue. We can compare what's happening with the desire expressed for months and years to target Monero, which has the advantage of having privacy as a standard. In recent months, the efforts of the American authorities have had a powerful impact, as Monero has been removed from most of the major centralized exchange platforms.
To tell the truth, this would be a good thing for Monero, as those who want to acquire it will have to do so in no-KYC mode, which is the very purpose of Monero's existence.
I've often talked about Monero as Bitcoin's ideal companion in recent months. Some people didn't like it, but I think Monero will have a role to play in the future in the war against privacy:
To conclude on services such as Samourai Wallet, which reinforce privacy in your use of Bitcoin, it would be preferable in the future that this type of service does not use a centralized coordinator and is not promoted by a company, as this represents a single point of failure that will inevitably be exploited by the authorities.
⛏️ Mining cost surged to 💵 $77.4K per BTC but due to high transaction fees, block reward + fees are even higher at $244K.
This imbalance rarely happens and could lead to BTC price soaring, miner shutdowns, or continued high transaction fees, per Capriole investments.
A Million Simulations, One Verdict for US Economy: Debt Danger Ahead.
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Bloomberg Economics ran a million forecast simulations on the US debt outlook.
88% of them show borrowing on an unsustainable path. Bitcoin is your solution to protect the fruits of your labor!
We can expect the DOJ to go after any target that promotes liberty and privacy. Any organization that promotes liberty is now an enemy of the state. The DOJ has once again shown us what we already knew. Satoshi Nakamoto would be long dead by now if anyone knew who that is.
Sorry to be so negative but I can only judge people and organizations by their actions, not by their words, their lies.