Darknet Bitcoin ‘Mixer’ Pleads Guilty to Laundering a Fortune

(Bloomberg) --

An Ohio man pleaded guilty on Wednesday to a conspiracy in which federal prosecutors say he laundered more than $300 million of Bitcoins generated through drug trafficking and other illicit activities.

Larry Dean Harmon, 38, admitted to operating a money laundering service called Helix from 2014 to 2017, according to a statement from the U.S. Justice Department. Helix was based on the darknet, the underbelly of the internet where users easily mask their identities to participate in illicit markets promoting the sale of drugs, weapons, malware and humans.

Helix was a cryptocurrency “mixer” or “tumbler,” a service that blends digital assets to make them harder to trace back to the original holder. It was advertised on the darknet as a way to evade the scrutiny of law enforcement, prosecutors said. Helix moved more than 350,000 Bitcoins on behalf of customers, the government said. In 2017, the cryptocurrency surged from about $1,000 per token to more than $19,000. It now trades around $45,000.  

Harmon, of Akron, was fined $60 million last year by the U.S. Treasury Department in the first crackdown on a mixer by its Financial Crimes Enforcement Network, or FinCEN. As part of his plea agreement, Harmon will forfeit more than 4,400 Bitcoins, now valued at more than $200 million, in addition to a prison term to be set at his sentencing, for which a date hasn’t been chosen yet, the Justice Department said.

Charles Flood, a lawyer for Harmon, declined to comment on his client’s plea. 

“Harmon admitted that he conspired with Darknet vendors to launder bitcoin generated through drug trafficking and other illegal activities,” Steven D’Antuono, assistant director in charge of the FBI’s Washington Field Office, said in the statement. “Today’s guilty plea demonstrates the FBI’s commitment to infiltrate and shut down the cryptocurrency money-laundering networks that support cyber-criminal enterprises.”

Earlier in the case, the court rejected a request by Harmon to dismiss charges of illegally transmitting money. He argued that Bitcoin isn’t really money. 

Money “commonly means a medium of exchange, method of payment, or store of value,” U.S. District Judge Beryl A. Howell in Washington wrote. “Bitcoin is these things.”

The case is U.S. v. Harmon, 19-cr-00395, U.S. District Court, District of Columbia (Washington). 

©2021 Bloomberg L.P.