19 min read

2024.17 - Seppuku

TLDR: You should always think of Bitcoin as "under attack". Some weeks, like last week, the attacks are simply more visible. Don't turn yourself into an easy target.
2024.17 - Seppuku


Last week the founders of Samourai —a popular, privacy focused wallet— were arrested and charged with money laundering.

Samourai allowed users to "mix" their coins using a technique they called "Whirlpool". There are different ways to "mix" but the basic premise is to make it harder to track identities tied to the ownership of certain coins.

As you may imagine, this created an uproar in the Bitcoin community

First Reading

At first blush, this triggered (appropriately) a "Bitcoin is under attack" reaction.

The FBI even chimed-in with scary warnings about non-KYC (self-custodial) wallets:

FBI warns Americans against using non-KYC #Bitcoin and crypto money transmitting services.

This was scary enough to make popular (and personal favorite) Sparrow Wallet immediately remove its Whirlpool functionality from their wallet.

Even Phoenix Wallet (one of the most popular Lightning wallets) opted out of serving US citizens entirely —even though theoretically Lightning is not the same as mixing, technically there is some resemblance.

Regardless of whether the attack on BTC perspective is objectively true, you should always act as if it is true. It informs the kinds of actions and safeguards you should put in place to prevent your BTC from being easily captured by a hostile government.

And let me be clear: they would absolutely, unequivocally prefer you NOT to take the necessary precautions and will make it uncomfortable for you if/when they can:

It's the kind of things that are easy to do with a little planning and diligence and hard or impossible to do if you wait until its too late. A little paranoia pays good dividends with BTC.

Second Reading

Did Samourai even break the law?

Threse are the two main charges against the Samourai devs:

  1. Conspiracy to Commit Money Laundering.
  2. Conspiracy to Operate an Unlicensed Money Transmitting Business.

1- Whirlpool helps users coordinate mixing, it doesn't actually recieve, hold or even touch the funds. The prosecutors are trying to claim that the Samourai software/servers (not the users) were doing the money laundering.

To unpack this: Imagine you sell tools. Someone buys a hammer from you, uses it to attack the neighbors. You are charged for selling weapons. If this goes through it would set a chilling precedent, not just for Bitcoin. Can any developer be charged because a user of their software used their app to commit a crime? (scary news for Excel devs I guess)

2- They were not money transmitters. Again, because users had control of their funds at all times its easy to objectively state they didn't transmit money. This will come down to trying to prove they knew/encouraged use of their service for illicit activities.

Here is where the developers might have put a noose around their own necks. They had a public F*ck You attitude towards rules which will surely be used against them.

Travis Wert has an excellent post on Nostr if you want to dive deeper into the imfo above:

Travis West
The indictment against the alleged Samourai Wallet (SW) operators was unsealed today. A few friends have been asking for my opinion on it and my channels are blowing up. I used to serve in law enforcement as a detective that specialized in cybercrime and blockchain analysis. The following information may be useful or interesting to some. Reading through the Department of Justice’s press release and the indictment itself, here are my initial thoughts: There are plenty of examples of past investigations resulting in arrests/convictions related to the operation of custodial mixing services, with Bitcoin Fog being the one in recent news. With a service taking custody of funds and moving funds between other people/users, they are likely going to be considered a money service business. And if a money service business doesn’t block Americans from using the service, the US Department of Treasury will require the operators of that service to register with them and follow their compliance regulations. Many foreigners have been arrested in foreign jurisdictions in order to be prosecuted in the US with an American judge and jury for allegedly violating federal American laws (read that sentence twice). With these sorts of cases, you are typically dealing with the idea that a service didn’t register correctly and follow compliance regulations. And then the other idea is that the operator of the service knew and allowed funds to move through it that would be considered “illicit” or “sanctioned.” Examples of illicit funds may be proceeds from illegal drug sales or funds stolen from someone. The sanction piece can involve entities, such as particular Bitcoin addresses, individuals, companies, or countries, using the service or receiving from the service. The US federal government maintains a sanction list. The above summary has been an on-going fight on privacy, censorship, and regulatory overreach for a while. It isn’t new (and Roman Sterlingov should be free). SW’s indictment is different from the situation I summarized above though. SW was a non-custodial service. This means that users controlled (their private keys to) their funds themselves and the service provider (SW) allowed the coordination between users through its infrastructure, such as the app, the server, the continued development, etc. This makes this case much more interesting and more concerning to me. Regarding the first count against the men: Conspiracy to Commit Money Laundering. The SW indictment alleges that SW was a service that provided “large-scale money laundering and sanctions evasion.” So we are talking about users using illicit funds with the service and sanctioned entities using or receiving from the service. And we are talking about the SW coordinators “conspiring” with the relevant users to do this. The indictment is constantly referring to SW as an “application” that is conducting or facilitating the mixing through a “centralized coordinator server.” Who controls the application and server? Allegedly the two men named in the indictment. When it comes to SW’s Whirlpool service: Through their server, their application is selecting the inputs. Their application is communicating information between all users necessary for the mixing to occur. Their application is using the private keys on behalf of the users. Their application is broadcasting the mixing transactions to the Bitcoin network. The picture the indictment is painting is that the application and server are essentially doing the money laundering, as opposed to the users using the service. Similar verbiage and logic are used to describe SW’s Ricochet service too (adding hops to a send you intend to do). The above summary is the most shocking piece of the indictment, in my opinion. The implications of this reach beyond Bitcoin-related apps and services. Think of the apps and services, just in general, that a user could use to engage in criminal behavior. Now think of arresting the developers/creators for what the user did. Regarding the second indictment against the men: Conspiracy to Operate an Unlicensed Money Transmitting Business. The indictment says the SW operators were “involved in the transportation and transmission of funds intended to be used to promote and support unlawful activity.” There isn’t any mention or consideration of custody of funds in this. The logic of the indictment: Some users may have used SW’s application and server for “unlawful activity” and therefore, SW was involved in the unlawful activity. Again, this is a scary precedent. Think of the applications and servers out there right now that users may be using for unlawful activity. There are many mentions apparently from the coordinators themselves that address the knowledge and intent element (important for a criminal trial). The SW operators were obviously passionate about financial privacy and resisting compliance regulations. Their messages (especially with their style of messaging) will be easy to spin/take literally, even if the coordinators were just trying to be edgy with their marketing/brand. The SW coordinators did not help themselves in this regard. I think the government will focus a lot on the coordinator’s knowledge and intent of the service being used for illegal activity. I believe this is how the government will “limit” the scope of the precedence and how it will try to differentiate the SW service from others. Regarding the illicit funds/sanctions piece: The blockchain analysis showing funds from Dark Web markets that sell illegal drugs flowing into SW’s Whirlpool will be easy for the prosecution. The same goes with sanctioned entities sending to or receiving from SW’s Whirlpool. It will also be easy to show funds flowing from known hacks, exploits, and/or thefts flowing into SW’s Whirlpool. The government will need to prove the men knew this was happening and that they facilitated it by providing the SW application and server. Their mouths may be their downfall on this one, but I think it is pretty clear that the SW operators’ intent was to provide a neutral financial privacy tool that didn’t control user funds, leaving the responsibility of the use of those funds on the users themselves. With the logic in this case, I wonder if it will be argued that blockchain analysis companies are also culpable since they surely had their own funds being mixed in SW’s Whirlpool to collect data points. Were their funds facilitating illegal activity? Or were their funds facilitating financial privacy in general? (Maybe facilitating privacy was just the byproduct of having the chance to trace through exclusions.) Overall, the case leads to some interesting questions. Is a wallet software and developer a money service business now? How about a full node? These both facilitate the transmission of funds too. The implications of this case are not good for privacy or code. I’m ready to donate to the defense.

Ironically, for all the prosecution's bluster of the defendants knowing Samourai was a "haven for criminals" it turns out the type of mixing Whirlpool provides is not favored by money launderers.

LaurentMT, who has domain expertise claims criminals prefer "fast" mixers where Whirlpool is designed to be "low-and-slow" providing more privacy over time.

Third Reading

Stay guarded and chill. Whatever their intentions Team Samourai made themselves highly visible targets through their general public attitude and tweets.

Let us guard our sovereignty and our privacy, and let's be vigilant on any and all encroachments. But let's also be smart about it and maybe don't kick the dragon in the balls.

PS. If you were a Samourai user

You might want to read this (your should be fine)

Closing Thoughts

I want to reiterate you should be performing full self-custody at this point. If you think "you're Bitcoining" by holding an ETF you should book a call with me right now.

Attacks to self-custody will come —there are way too many incentives for it— and an ETF gives you no defense against them.

One incentive could be exercising Capital Controls ("your money stays HERE")

Why would they do this? Listen to Ray Dalio's description of a collapsing currency and let me know if anything comes to mind…

Another possible motivation —one that requires deeper connecting-of-the-dots— is Wall Street trying to co-opt BTC to use as the base-layer of their tokenized "omnicoin"

I know self-custody can be intimidating, especially as the value of your holdings rise. I was very excited to see Nunchuk announce their new "Hal Finney" wallet. I've been experimenting quite a bit with Nunchuk recently and signed up to try the "Hal Finney", I'll report more on this soon.

Speaking of Seppuku

I couldn't NOT mention the Yen, which may be big news next week. More in the Fiat Section but here's a taste:

Bitcoin News

All the Action

This breakdown of MSTR stock by Michael Saylor is simply phenomenal, if you have money in a brokerage account and haven't allocated to MSTR, you may want to give this a listen.

Speaking of MSTR, it's hard to know just how much adopting the stock price could benefit from adopting the new accounting rules recently approved by FASB. Ryan, here is so bullish he thinks it could go 6X

What is not in question is that the numbers would benefit enormously, as the current accounting standards for corporations holding BTC are very punitive, as Jeff demonstrates in this tweet.

Long story short, as soon as MSTR switches to the new accounting rules, its numbers are going to look A LOT better. Most might not understand the nuance of what happened, but the message of "BTC is good for your balance sheet" should be loud and clear.

And slowly but surely, the tools for businesses to add BTC will keep rolling out.


The oldest bank in the US, BNY Mellon has dipped its toes into BTC through various ETFs.

It turns out at least one of the Mellon heirs has been a Bitcoiner for some time.

"I feel like citizens are fed up with banksters…We need to live in a more transparent, free democracy. The more secretive America becomes, the more dangerous it is. The solution, is Bitcoin"
—Matthew Taylor Mellon, from 2014 Forbes Article

Registered Financial Advisors (RIAs) are also testing the waters.


The HongKong ETF is expected to launch tomorrow. The market is a different beast from the US in several ways. However it plays out in the short run, this should be bullish for price.

Krypto News

"Crypto" can be lethal to your portfolio


On the one hand it's good to see companies standing up to the SEC, on the other hand I really don't feel Consensys —the poster child for decentralization theater— can or should be defended.

Fiat News


Much ink has been spilled about the Bank of Japan and I can't promise a great bite sized-summary, so I'll borrow one from Luke Gromen:

Everybody seems to remember that Reagan won the Cold War by bankrupting the Soviets; nobody seems to notice that is EXACTLY what the Russians and Chinese are doing to us now…and the weaker JPY is serving as an accelerant on this. —Luke Gromen


Japan has been at the forefront of Monetary shennanigans —the kings of runaway debt— for decades. That their economy has not melted down completely is a testament to their skill, aided by an unusual combination of demographics, trade imbalance and cultural cohesion.

Lately the Yen has been under a lot of pressure, made visible by the Yen's weakening exchange rate

They have a very deep (multi-trillion) war chest of US-denominated assets (including USTs) which they could sell to help stop the Yen's downward spiral

But geopolitics come into play in ways that are above my paygrade. Two notable items are :

  • Treasuries are not as popular as they used to be. If Japan dumps their US Treasuries this would further disrupt the US Gov's ability to fund itself through new debt (which would quickly put them in Uncle Sam's shit-list).
  • The Yen, the Yuan, the price of oil and the USD are intertwined in a complex relationship that has changed since China started pricing oil in gold-backed Yuan

This morning the BOJ finally intervened to slow down the crash.

We will see what comes of it, and how long it lasts.

Your takeway is: The Yen breaking is like the fiat system running a high fever, something's wrong and short term remedies are unlikely to mean a long-term cure.

PS. This is how much BTC you need to buy 1 Yen = 0.00000009 (or 9 sats). In my book when your unit of currency is worth less than 1 sat, that's game over.


Speaking of fevers, the US planning on 1.7 Trillion in interest spending a year from now is another clear sign all is not well in fiat-world.

Any great power that spends more on debt service (interest payments on the national debt) than on defense will not stay great for very long —Ferguson's Law

The "Hail-Mary" tax increases being considered wouldn't put a dent on that debt, even if they didn't backfire (which I bet they would)

For some, the ravages of inflation have been masked by a nominally-rising stock market (which has been flat on real terms)

With the Magnificent 7 been doing most of the heavy lifting, it's easy to overlook that most of the stock market is actually not doing all that well. In fact, considering inflation, nothing is.

In a nutshell, this is how fiat is doing:


The seizure of frozen assets, property of the Russian Central Bank, prompted a swift response from Russia, which said it would seize just under $440M from Epstein's banker (JP Morgan) and seizures could grow substantiually larger.

Breaking the tacit agreements on what is lawful is a stupid and very dangerous game to play.

This is not the product of ignorance, so what is it?

Dystopian News

Refusing Money

A country that does not have excessive wealth is turning off excessive hydro generation instead of using mining to balance their load and earn additional revenue. This is how early we are.


A flamethrowing robo-dog you say? When BTC hits $200k, there will be signs…


It is sobering that there are people who believe this gentleman has four more years in the tank.

Bug Detector

Are you already eating the bugs? You may think you aren't, but do you actually know?

Fine Print

You do read these, right? Did you know some GameStation in the UK allegedly included language where you transferred ownership of your soul to them in one of these as part of an April 1st joke in 2010? Fun times.

Price News

Guest Charts

Not a chart, but a useful reminder. Markets like BTC often "reset" after a bullish run (like we've had since September 2023). These breathers are necessary and healthy.

Bitcoin Surfing

The Board ($66.6k) is still close but BTC didn't even reach for it last week.

Dip Fishing

Last week I suggested placing your nets around $62.5k I hope you caught some sats! If I were fishing for even cheaper sats I'd place a net close to $60k

Calm Chart

April is holding red and I expect it will close that way.