The U.S. Financial Crimes Enforcement Network (FinCEN) has imposed a hefty civil sanction on the operator of two Bitcoin (BTC) mixers.
In an Oct. 19 announcement, FinCEN assessed a $60 million civil penalty against Larry Dean Harmon for violating the Bank Secrecy Act through the operation of his Helix and Coin Ninja Bitcoin mixers.
Cryptocurrency mixers are services meant to move crypto assets on a blockchain in a way that prevents third-parties—including law enforcement—from being able to follow them via on-chain data. Such services have always played a major role among the criminals who use cryptocurrencies, but are also endorsed by many crypto proponents as true to the initial ideals of the space. To this day, there is still much confusion surrounding whether such services can be legally used or not.
The regulator claims that Harmon operated Helix from 2014 to 2017 and Coin Ninja from 2017 to 2020 and that both were unregistered money services. Helix alone reportedly conducted over 1,225,000 transactions for its customers and was associated with virtual currency wallet addresses that sent or received over $311 million. The announcement reads:
“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.”
FinCEN added, “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.”
Because of his involvement in the operation of those two mixers, Harmon is also being prosecuted by the U.S. District Court for the District of Columbia on criminal charges of conspiracy to launder monetary instruments and the operation of an unlicensed money transmitting business.
According to the regulator, services such as those are money transmitters under the Bank Secrecy Act and need to undergo registration. Furthermore, they are also required to develop, implement, and maintain an anti-money laundering compliance program while also recording their activity and reporting to the authorities.
The measures undertaken against Harmon were a joint effort by the FinCEN, the U.S. Department of Justice’s Computer Crimes and Intellectual Property Section, the U.S. Attorney’s Office for the District of Columbia, the Federal Bureau of Investigation, and the Internal Revenue Service Criminal Investigation division.