An operator of a bitcoin “mixer” has pleaded guilty to conspiracy to launder money, the U.S. Justice Department said on Wednesday.
Larry Dean Harmon, who ran a mixer called Helix, pleaded guilty Wednesday to conspiracy to launder monetary instruments. He entered his plea through a videoconference call to a federal court in Washington, D.C.
Mr. Harmon, who is currently out on bail in Akron, Ohio, will be sentenced at a later date and could face up to 20 years in prison, according to court documents.
A virtual currency “mixer” or “tumbler” charges customers a fee to send cryptocurrencies to a designated address in a manner designed to conceal the source or owner of the currency.
The Justice Department investigation was coordinated with the Financial Crimes Enforcement Network, a bureau of the U.S. Treasury Department which had already fined Mr. Harmon $60 million in October for allegedly violating anti-money-laundering laws.
Mr. Harmon, 38 years old, was arrested last year and charged with conspiracy to launder money, operate an unlicensed money-transmitting business and conduct money transmission without a Washington, D.C., license.
Between 2014 to 2017, Mr. Harmon operated Helix, which prosecutors said is a Darknet-based cryptocurrency-laundering service that laundered more than $300 million in bitcoin. Prosecutors also said Helix was linked to and associated with “Grams,” a search engine also run by Mr. Harmon, and was advertised to customers on the Darknet as a way to conceal transactions from law enforcement, according to the indictment unsealed in February 2020.
Mr. Harmon admitted during the hearing Wednesday that he conspired with several Darknet marketplaces, including AlphaBay, Evolution, Cloud 9 and other platforms, to provide bitcoin money-laundering services for their customers. He also admitted to being aware that AlphaBay and Evolution offered platforms to buy illegal drugs and other illicit goods and services, like hacking and money-laundering.
Prosecutors said he took commissions from the exchange of approximately 354,468 bitcoins—valued at more than $300 million at the time—conducted through Helix.
Kenneth Polite, assistant attorney general of the Justice Department’s criminal division, shown at a Senate committee hearing in May.
Photo: Rod Lamkey/CNP/Zuma Press
Charles Flood, an attorney representing Mr. Harmon, said during the hearing that they reserved the right to argue at sentencing that Mr. Harmon didn’t know the exact amount of the transactions laundered through Helix involving proceeds from drug-trafficking. Mr. Flood didn’t elaborate.
As part of the plea agreement, Mr. Harmon agreed to forfeit more than 4,400 bitcoins, valued at more than $200 million at current prices, and other seized properties, and cooperate with law enforcement.
“By holding Harmon accountable, the department has disrupted the unlawful money laundering practices of these dangerous criminal enterprises,” Assistant Attorney General Kenneth Polite Jr. of the Justice Department’s Criminal Division said in a news release.
Mr. Harmon’s case is one of the first involving a cryptocurrency mixer that has resulted in a conviction, according to Ari Redbord, a former assistant U.S. attorney for the District of Columbia and a former senior adviser at Treasury. The guilty plea shows U.S. law enforcement is pursuing cryptocurrency mixers with connections to the Darknet and illicit activities, while the transparency of blockchain enables them to trace the funds.
“The nature of cryptocurrency is to allow law enforcement to have unique visibility on financial flow where they never had before,” comparing it to government-issued fiat currency, said Mr. Redbord, who is now head of legal and government affairs at TRM Labs Inc., a digital currency tracing firm.
Write to Mengqi Sun at [email protected]
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