The Financial Crimes Enforcement Network (FinCEN) has assessed a civil penalty of $US60 ($85) million from Larry Dean Harmon, the founder of “bitcoin mixers” Helix and Coin Ninja. The penalty is the first of its kind in the United States.
FinCEN claimed that Harmon “wilfully violated the BSA’s registration, program, and reporting requirements by failing to register as a MSB, failing to implement and maintain an effective anti-money laundering program, and failing to report suspicious activities.”
Between 2014 and 2017, the services allegedly laundered up to 1,225,000 transactions worth $US311 ($439) million dollars.
Bitcoin mixers obfuscate or completely hide the source and targets of various transactions. For example, you can send cryptocurrency into a mixer and inform the mixer of your target address. The mixer will send the bitcoin to the target on your behalf, ensuring that the actual transaction is anonymous. FinCEN claimed that Harmon “advertised its services in the darkest spaces of the internet as a way for customers to anonymously pay for things like drugs, guns, and child pornography.”
“Specifically, the investigation demonstrated that Mr. Harmon deliberately disregarded his obligations under the BSA and implemented practices that allowed Helix to circumvent the BSA’s requirements. This included a failure to collect and verify customer names, addresses, and other identifiers on over 1.2 million transactions. Harmon, operating through Helix, actively deleted even the minimal customer information he did collect. The investigation revealed that Mr. Harmon engaged in transactions with narcotics traffickers, counterfeiters and fraudsters, as well as other criminals,” wrote FinCEN in its penalty assessment.
Most notably, according to FinCEN, Harmon mixed funds for a site called AlphaBay, a darknet marketplace that shut in July 2017 after an international investigation. Former Attorney General Jeff Sessions announced the takedown of AlphaBay and another market, Hansa, on the July 20, 2017.