The rate at which cryptocurrencies are being used by bad actors to facilitate illegal activities is quite alarming. Along with it, Bitcoin mixers have become a popular tool amongst criminals that further enhance the privacy of one’s transactions, by letting users mix their coins with other users.
Mixers make it much harder for regulators to track illicit funds, but not impossible. However, the United States Financial Crimes Enforcement Network (FinCEN) wants to crack down on these services and has landed its first blow by announcing a hefty penalty for a Bitcoin mixer for the first time.
According to a press release, FinCEN has imposed a whopping $60 million civil penalty against Larry Dean Harmon, responsible for operating multiple privacy-enhancing services. Some his services include Lightning Network Wallet Dropbit, and the Bitcoin mixers Coin Ninja and Helix.
The announcement alleges that both Helix and Coin Ninja operated as unregistered Money Service Businesses (MSB). Harmon has also acted against regulations while also evading taxes and specific compliances that would’ve been in place if the platform was licensed.
As per US regulations, registered Bitcoin mixers would be under obligation to implement and maintain effective AML/KYC policies, keep track of all transactions, and report suspicious activities.
FinCEN claims that Harmon’s mixers channeled at least $311 million through more than 1 million different BTC transactions between 2014 and 2020.
The FinCEN adds:
“FinCEN’s investigation has identified at least 356,000 bitcoin transactions through Helix. Mr. Harmon operated Helix as a bitcoin mixer, or tumbler, and 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. Mr. Harmon subsequently founded and acted as Chief Executive Officer of Coin Ninja, which operated as an unregistered MSB and in the same manner as Helix.”
Bitcoin Mixing a “Crime”
Apart from the FinCEN, Harmon is also facing criminal charges from the US Department of Justice (DOJ) for ties with services that facilitated money laundering. Even though biotin mixers aren’t illegal, authorities argue that involvement with any service that facilitates illegal activities is.
Harmon’s bitcoin mixing services allegedly laundered tens of millions of dollars in crypto for infamous darknet markets including Abraxas, Agora, Hansa, Hydra, and Wall Street Market.
AlphaBay, a now inactive darknet giant, supposedly had close ties with Harmon’s Helix, which helped launder $27 million in Bitcoin for AlphaBay by integrating its mixing services on site.
This was also the first time the DOJ explicitly labeled a Bitcoin mixing service as a “crime”. Further progress down this line could mean trouble for any service that uses obfuscation tactics to conceal Bitcoin’s open ledger system.
