Larry Dean Harmon, an Ohio citizen, pleaded guilty to laundering more than $300 million while running the Helix darknet-based Bitcoin mixing service from 2014 to 2017.
The 38-year-old pleaded guilty to laundering more than 350,000 Bitcoin through Helix from 2014 to 2017, according to the US Department of Justice.
Bitcoin mixers use to anonymize Bitcoin transactions. Because all transactions are recorded and unchangeable on the blockchain, this has previously enabled people to hide their footprints on the Bitcoin ledger. As a result, crooks began to choose mixers.
Harmon admitted in court that he was aware that users blended money from drug trafficking with proceeds from other illicit acts. He also inadvertently teamed up with darknet markets to offer money laundering services to their members.
Harmon also ran Grams, a darknet search engine, launched DropBit, a digital asset wallet provider, and was the CEO of Coin Ninja, a Bitcoin media site, where Harmon advertised his Bitcoin mixer.
As part of the plea agreement, Harmon surrendered more than 4,400 bitcoins (worth more than $200 million at current rates). Harmon’s sentencing date has yet to be set, but he faces a maximum sentence of 20 years in jail plus fines.
Harmon had argued in earlier court appearances that BTC was not money, and hence he could not be held guilty. Although he mixed Bitcoin through his business, he said that Bitcoin is not money, so he couldn’t be prosecuted for money laundering. However, presiding Judge Beryl A. Howell dismissed that argument.
“The term ‘money’ […] refers to a medium of trade, a payment method, or a store of value. These are the things that Bitcoin is.
Indeed, [Harmon] never denies that Bitcoin is money in the conventional sense, and he admits that Bitcoin is a form of currency,” the court said.
Officials have been looking into Helix and Harmon since at least 2014, when the mixer was in operation, with the IRS Cybercrimes Unit, Belize Ministry of the Attorney General, Belize National Police Department, and FBI collaborating to investigate Harmon and Helix during a period of several years.
Harmon was arrested by FinCEN in February 2020 for operating his Bitcoin mixer without registering it as a money service firm. For the charges, he received a $60 million fine.
Acting US Attorney Channing D. Phillips stressed the importance of darknet mixers in assisting illegal actors in concealing their identities, saying:
“Darknet markets and the dealers who sell opioids and other illegal drugs on them are a growing scourge. They may try to hide their identities and launder millions in sales behind technologies like Helix. But the department and its law enforcement partners will shine a light on their activities.”
Other Bitcoin mixing businesses have been under fire in recent years as a result of a flurry of regulatory activity in the United States.
The operator of the Bitcoin Fog mixer was arrested in Los Angeles in April for laundering $336 million in Bitcoin over a ten-year period.
