- Coin Ninja CEO arrested for alleged involvement in $300 million laundering.
- The U.S. Department of Justice (DOJ) classifies Bitcoin Mixing as a money laundering business.
Coin Ninja CEO Larry Harmon was arrested for his alleged participation in a money laundering scheme. The investigation was conducted by the Internal Revenue Services (IRS) and the Federal Bureau of Investigation (FBI) with assistance from the Financial Crimes Enforcement Network.
Harmon collaborated to launder 350,000 Bitcoin
Harmon was indicted by the U.S. Department of Justice on the following charges: conspiracy to launder money with monetary instruments, operating an unlicensed money transmission business, and transferring money without a license. The case will be handled by Superior Judge Beryl Howell in the United States District Court for the District of Columbia.
According to the indictment, Harmon created and operated the Bitcoin Mixer Helix from 2014 to 2017. This allowed Helix customers to send money to a recipient with a method “specifically designed” to hide the source and activity of the Bitcoin transactions.
In addition, the DOJ alleges that Harmon conducted business through the Darknet and offered its services to conceal its clients’ transactions from U.S. law enforcement agencies. The DOJ claimed that Helix and the Bitcoin Mixing method are part of a business used to send and launder money.
According to the indictment, Helix’s services were advertised through Grams, Harmon’s search engine in the Darknet. Helix’s services could be purchased in Columbia and other selected states in the U.S.. Helix offered to “clean up Bitcoins” for its clients by claiming to use new addresses for each transaction to avoid the authorities.
The Department of Justice estimates that Harmon laundered about 350,000 bitcoins valued at $300 million during Helix’s operating period. U.S. Assistant Attorney General Brian Benczkowski said:
Helix allegedly laundered hundreds of millions of dollars of illicit narcotics proceeds and other criminal profits for Darknet users around the globe.
IRS Chief of Criminal Investigation Don Fort also issued statements on the case. Fort claimed that Helix had only one purpose and that was to conceal transactions on the Darknet from U.S. authorities. He also added:
Working in tandem with other sites, he sought to be the ‘go-to’ money launderer on the Darknet.
The investigation indicates that Harmon’s alleged company, Helix, was working in conjunction with AlphaBay. Helix provided the Bitcoin laundering service to this other company which, according to the allegation, was one of the largest black markets in the Darknet. AlphaBay was shut down in 2017 by a DOJ investigation.
Implications for the Bitcoin market
The DOJ’s arrest and investigation is a precedent that could hurt other companies that offer Bitcoin Mixing services. In the crypto-community, there has been a response of fear and uncertainty for privacy coin advocates and users.
In 2019 major exchanges took Monero, Zcash, Dash and other privacy coins off their portfolio. The authorities have been increasing actions against these cryptocurrencies and, in the future, other users could be accused of similar charges.