The Department of Justice has arrested a man who allegedly was running a bitcoin mixing service on the dark web that helped criminals launder bitcoin transactions. ZDNet reported that this was the first case the Department of Justice brought against a bitcoin mixer.
The Department of Justice stated that Larry Harmon, from Ohio, was arrested for his operation of Helix, which the Department of Justice describes as a “Dark-net based cryptocurrency laundering service.” He was charged with money-laundering conspiracy, operating an unlicensed money transmitting business and conducting money transmission without a D.C. License.
According to the indictment, Harmon operated Helix from 2014 to 2017. Helix functioned as a bitcoin “mixer” or “tumblr,” allowing customers, for a fee, to send bitcoin to designated recipients in a manner that was designed to conceal the source or owner of the bitcoin. Helix was linked to and associated with “Grams,” a Darknet search engine also run by Harmon. Harmon advertised Helix to customers on the Darknet as a way to conceal transactions from law enforcement.
The indictment alleges that Helix moved over 350,000 bitcoin – valued at over $300 million at the time of the transactions – on behalf of customers, with the largest coming from Darknet markets. Helix partnered with the Darknet market AlphaBay to provide laundering services for AlphaBay customers. AlphaBay was one of the largest Darknet marketplaces in operation at the time it was seized by law enforcement in July of 2017.
When I hear the phrase “money-laundering”, it makes me think of physical money being sneakily transferred through various businesses and/or bank accounts. I had not considered that bitcoin could also be laundered, but it appears it is possible. I think that this precedent – that you can get arrested for laundering bitcoin – could make those who are currently doing it consider stopping.
Another interesting thing about this case is that it makes it clear that bitcoin isn’t really private. There are apparently ways for law enforcement to track where the bitcoins go, how many bitcoins go were transferred, and the people involved in transferring it.