The Financial Crimes Enforcement Network charged Larry Dean Hamon, the founder, and CEO of bitcoin mixer Helix and Coin Ninja, for violations of the Bank Secrecy Act.
FinCEN imposed a penalty of $60,000,000.
Currently, he is being prosecuted in the US District Court for the District of Columbia on the charges of money laundering and operating an unlicensed money transmitting business, Helix, from 2014 to 2017.
FinCEN argues that as per its 2013 Guidance, exchangers and administrators of digital currencies are money transmitters under the BSA and obligated to register with it. As per the 2019 clarification, the same rules extended to the mixers of virtual currencies.
FinCEN’s report says between June 2014 to December 2017, Helix conducted more than 1,225,000 transactions with at least 356,000 BTC transactions.
“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 bitcoin mixing service allegedly laundered tens of millions of dollars in crypto for darknet markets like Agora, Abraxas, Hydra, Hansa, and Wall Street Market. Former darknet giant AlphaBay allegedly also had close ties to Helix as it laundered $27 million in Bitcoin for the now-defunct marketplace.
Besides circumventing BSA’s requirements, they failed to collect and verify customer names and addresses of over 1.2 million transactions. Helix also deleted the minimal customer information it collected, and Harmon was also engaged in transactions with fraudsters, narcotics traffickers, counterfeiters, and other criminals.
This action, which FinCEN said to be the “first” one against a bitcoin mixer, is the first time such activity is called “crime” by the Department of Justice (DOJ), which could mean further troubles for services using obfuscation to make bitcoin not traceable.