Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) fined a Bath Township man it accused of violating anti-Money Laundering laws and running a business affiliated with darknet sites.
Federal prosecutors said Larry Dean Harmon laundered more than $300 million worth of cryptocurrency often used for illegal transactions in underground marketplaces. He also exchanged bitcoins hundreds of times on behalf of customers, operated an unlicensed money transmitting business and transmitting money without a license, court records show. He was ordered to pay $60 million in fines for violating reporting and registration requirements under the Bank Secrecy Act
This marks the second time FinCEN has taken action against a cryptocurrency business and comes seven years after it first issued guidance requiring those who buy and sell digital assets to register as money-services businesses.
FinCEN’s announcement refers back to its 2013 Guidance, in which it stated that this type of business is required to obtain regulatory licenses and establish an anti-money laundering compliance program.
Harmon has allegedly operated two Bitcoin businesses, Helix from 2014 to 2017 and Coin Ninja from 2017 to 2020. These services have allowed users to launder more than 350,000 bitcoins, the equivalent to about $400 million, and obscure its origin in a practice known as 'mixing' or 'tumbling'.
Prosecutors allege Harmon charged a 2.5% fee, which would be about 900 bitcoins worth close to $106 million at today’s prices.
“Mr. Harmon operated as an exchanger of convertible virtual currencies by accepting and transmitting bitcoin through a variety of means. From June 2014 through December 2017, Helix conducted over 1,225,000 transactions for its customers and was associated with virtual currency wallet addresses that sent or received over $311 million dollars. 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,” the FinCEN explains.
Helix and Coin Ninja were advertised to customers as a way to conceal transactions from law enforcement and were used in connection with underground marketplaces: Agora Market, Nucleus and Dream Market. His two operations were also accused of partnering with the dark website, AlphaBay in a scheme that lasted until federal authorities shut it down in 2017.
These darknet places allowed customers to buy drugs, fraudulent ID documents and other illegal items.
