The operator of Bitcoin mixers that serve darkish net markets faces a FinCEN tremendous of $ 60 million
Written by Joe Warminsky
The operator of two “mixer” or “tumbler” services that swapped cryptocurrency for users in “the darkest rooms on the internet” is being penalized by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) with civil penalties of $ 60 million US dollar faced.
The decision against Larry Dean Harmon, who operated the services Helix from 2014 to 17 and Coin Ninja from 2017 to 20, is the first of its kind by FinCEN against a Bitcoin mixer. The agency said he had not both registered as a money services provider and in breach of federal commitments to “develop, implement and maintain a compliance program to combat money laundering; and to meet all applicable reporting and record keeping requirements. “
In particular, Harmon was unable to file suspicious activity reports for dark web market transactions as required by the Banking Secrecy Act. “Mr. Harmon operated Helix as a bitcoin mixer or tumbler, promoting its services in the darkest rooms of the internet so customers can anonymously pay for things like drugs, guns and child pornography,” FinCEN said in a press release.
Harmon is also facing charges in federal court in Washington, DC, where he is prosecuted for conspiracy to launder monetary instruments and engage in an unlicensed money transfer business. The FinCEN rating comes from US law enforcement agencies and their international partners continuing to put pressure on trafficking in illicit goods on the dark internet, a part of the internet that can only be accessed through the Tor browser.
FinCEN’s official review focuses primarily on Helix and offers a glimpse into the ecosystem of dark web markets from 2014 to 17, a time when Bitcoin was the primary cryptocurrency for transactions on these websites.
The agency found that Helix had “directly interacted with 39 darknet marketplaces and other illegal markets” and accounted for more than 240,000 bitcoin transactions valued at around $ 39 million. At least 2,097 of these direct transactions involved Bitcoin, each worth more than $ 2,000, according to FinCEN.
The AlphaBay connection
Much of Helix’s transactions took place on AlphaBay, the largest platform for illegal goods on the dark internet, until it was disbanded by the government in 2017.
“In or around November 2016, the AlphaBay website recommended that their customers use a bitcoin tumbler service to erase all traces of [their] Coins sourced from AlphaBay that provided an embedded link to the Tor website for Helix, ”FinCEN said. Helix completed 191,988 Bitcoin transactions within AlphaBay valued at more than $ 27 million, the agency said.
Helix served other well-known markets on the dark internet, including Dream Market, Valhalla Market, Wall Street Market, and Joker’s Stash, FinCEN said.
According to the assessment, Helix also interacted with BTC-e, the cryptocurrency exchange allegedly operated by Alexander Vinnik, a Russian currently on trial in France on charges of money laundering and involvement in organized crime. “FinCEN watched Helix use BTC-e to conduct 1,723 direct bitcoin transactions valued at over $ 904,637,” the agency said, and Harmon did not file a report of suspicious activity.
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AlphaBay, Bitcoin, Coin Ninja, Cryptocurrency, Dark Web Markets, Dream Market, FinCEN, Helix, Joker’s Stash, Larry Dean Harmon, Finance Department, Valhalla Market, Wall Street Market (dark web)