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FinCEN Issues $60 Million Penalty to Bitcoin Mixer Larry Harmon

Larry Dean Harmon is a hired bitcoin mixer that is now in trouble for bitcoin mixing. In other words, he’s stuck facing a multi-million dollar fine because he did his job, though whether that job is legal is still widely open to question. As the owner of bitcoin mixers Helix and Coin Ninja, Harmon has been saddled with a $60 million penalty by the Financial Crimes Enforcement Network (FinCEN). Harmon Has Been Saddled With a Big Penalty In a statement, FinCEN claims: [Harmon] willfully violated the BSA’s registration, program and reporting requirements by failing to register as an MSB, failing…

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“Your Expectations of Privacy Are Too High” (But They Shouldn’t Be)

Bitcoin mixing, the practice of scrambling one’s bitcoin with others in order to obscure the connection between an individual’s identity and coin address information, has seen a number of innovations over the last decade. Some of the early mixing efforts took the simple form of two coin holders privately agreeing to swap coins in like amounts and led to the formation of transaction aggregation services, crypto tumblers, Lightning, and the practice of moving coin balances through interim coins like Dash or Monero, or others. There are also logless VPNs, Tor, and using HD (“Deterministic”) wallets. Each of these practices comes…

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Bitcoin Fungibility, Mixing and the Legal Limits on Maintaining Privacy

On February 13, 2020, Larry Harmon, of Akron, Ohio, was charged with three counts: (1) conspiracy to commit money laundering, (2) operating an unlicensed money transmitting business and (3) conducting money transmission without a DC license.  According to the DOJ, Harmon operated “Helix,” which was also known as a “tumbler” or “mixer,” without registering as a money services business or money transmitter. These technologies allow a user to obfuscate the origin of their bitcoin. Regulations on Bitcoin Privacy According to the Bank Secrecy Act (BSA), exchanging virtual currency (among other things) is a FinCEN-regulated activity. According to FinCEN, “[a]n exchanger…

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The Bitcoin Mixing Case at the Center of the Fight for Transaction Privacy

A court case is underway in the United States that could become a watermark decision for Bitcoin transaction privacy and compliance law.  Larry Harmon of Ohio — who, incidentally, owns the Coin Ninja media site — was recently charged and arrested for money laundering some 350,000 bitcoin (roughly $300 million at the time of the indictment) through his custodial mixing service, Helix. Harmon’s service catered to dark web market participants, particularly sellers, and he associated this service with Grams, his dark web search engine. Authorities may have sniffed Harmon out following the forced closure of AlphaBay in July 2017. At…

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