Darknet Crypto Mixer’s Guilty Plea May Set Precedent for Privacy Services
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Darknet Crypto Mixer’s Guilty Plea May Set Precedent for Privacy Services

10 months ago

Helix operator admits he laundered more than $300 million for drug traffickers and other criminals.

Darknet Crypto Mixer’s Guilty Plea May Set Precedent for Privacy Services

Зміст

The operator of darknet-based cryptocurrency mixing service Helix has pleaded guilty to money laundering charges that could see him jailed for 20 years.

Akron, Ohio resident Larry Dean Harmon, 38, did more than just run a mixing service that obfuscated the source and ownership of more than $300 million worth of Bitcoin, according to an August 18 announcement by the acting U.S. Attorney for the District of Columbia, Channing Phillips.

 “Harmon admitted that he conspired with Darknet vendors to launder bitcoin generated through drug trafficking and other illegal activities,” said Steven D’Antuono, assistant director in charge  of the FBI’s Washington, D.C. field office. 

Mixing services combine many Bitcoin (or other cryptocurrencies) with other users’ transactions or send them to a huge number of service-owned wallets, and then send them to predetermined clean wallets that are transferred to the customers. It’s similar to the way privacy coins like Monero — which John Oliver trashed on the Aug. 16, 2021 Ransomware episode of Last Week Tonight — obscure ownership. 
Between 2014 and 2017, Harmon ran both Helix and Grams, a Darknet search engine, while also working with Darknet markets AlphaBay, Evolution, and Cloud 9, among others. These markets sold illegal drugs, false and stolen IDs, hacking tools, and guns, among other contraband.

In addition to prison, the feds also seized 4,400 bitcoins worth some $200 million and other property. IThe money laundering conspiracy charges also come with a fine of $500,000 or up to “twice the value of the property involved in the transaction,” the release said. Harmon helped launder bitcoins then worth more than $300 million, so that fine could be substantial. 

In addition, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) fined Harmon $60 million last October for violating the Bank Secrecy Act. Harmon is also the CEO of Bitcoin news site Coin Ninja and founder of crypto wallet DropBit.

While trumpeting its ongoing war on Darknet criminal markets, the Department of Justice (DoJ) also pointed to its focus on identifying and stopping “those who use the Darknet to facilitate and obscure their criminal conduct,” according to Assistant Attorney General Kenneth A. Polite Jr.

“[T]hese marketplaces thrive in large measure because of the infrastructure that supports them. Harmon profited by facilitating the back-channel support of these marketplaces and helped criminals launder money they received via illicit activities,” IRS Criminal Investigations division Chief James Lee pointed out.

Pointing to “technologies like Helix, Philips promised that the DoJ would “dismantle the infrastructure such criminal marketplaces depend on, and prosecute and convict those responsible.”

Are Mixing Services Under Siege?

Harmon is not the only mixing service operator arrested by the Justice Department on money laundering charges. 

In April, U.S. authorities arrested Roman Sterlingov, the alleged administrator of the Bitcoin Fog mixing service on money laundering charges.
Back in February when Harmon’s arrest warrant was unsealed, Twitter user Barbie Trades asked Compound Finance general counsel Jake Chervinsky to chime in on her fear that the feds would use Harmon’s arrest “to make an example to try and scare people away mixing services.”

Chervinsky, a well-known crypto legal commentator and DeFi chair of the Blockchain Association, said that the then-allegations that Harmon “was directly involved in criminal activity & intended to launder the proceeds of crime... makes it a tough case.”

But, he added, in his opinion the “DoJ is going too far by charging unlicensed money transmission offenses.”

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