Bloke behind Helix Bitcoin launderette jailed for three years, hands over $400M – Source: go.theregister.com

An Ohio man, who operated the Grams dark-web search engine and the Helix cryptocurrency money-laundering service associated with it, has been sentenced to three years in prison.

Larry Dean Harmon, 41, set up Grams in April 2014. Three months later he also set up on the dark web Helix, a so-called mixer or tumbler service that pools and swaps people’s Bitcoins to obfuscate the original sources, according to court documents. You put your BTC into Helix and you get the equivalent amount of other people’s out.

You can only imagine why someone would want to do that. Hint: You don’t want your funds associated with wallets used by cybercrime marketplaces.

Over three years of operation, Harmon laundered 354,468 bitcoins (around $311 million at the time, around $32 billion these days) and charged a possible 2.5 percent fee for transactions.

“No one has ever been arrested just through Bitcoin taint, but it is possible and do you want to be the first?” he wrote on Helix’s website to encourage people to use his underworld service, according to court documents [PDF]. “Most markets use ‘Hot Wallets’, they put all their fees in these wallets. [Law enforcement] just needs to check the taints on these wallets to find all the addresses a market uses.”

But things kicked up a notch in about November 2016 when Harmon entered into a partnership with Alphabay – then the largest bazaar for illegal goods on the dark web. That souk was taken down in July 2017. A few months later, Harmon began to shut down operations for Grams and Helix.

He set up the Bitcoin-promoting site Coin Ninja, but in February 2020 he was arrested and charged with money laundering, operating an unlicensed money transmitting business, and conducting money transmission without a license, all in connection with the operation of Helix.

His assets, including a Trezor crypto wallet, were seized, and he faced charges that could put him in prison for over 20 years.

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However, his younger brother Gary managed to access a seized cryptocurrency storage device using his brother’s credentials and stole more than 712 Bitcoin. He then rather foolishly went on a spending spree, being photographed in a bath full of money and buying a luxury condo in Cleveland. In 2023 he was sentenced to four years and three months in prison for the theft.

The elder Harmon pleaded guilty in August 2021, and agreed to the forfeiture of more than 4,400 Bitcoins (today worth $400,200,000) and other seized properties.

“Harmon admitted that he conspired with Darknet vendors to launder bitcoin generated through drug trafficking and other illegal activities,” assistant director in charge Steven D’Antuono of the FBI’s Washington Field Office said at the time. That “guilty plea demonstrates the FBI’s commitment to infiltrate and shut down the cryptocurrency money-laundering networks that support cyber-criminal enterprises.”

In addition to his time behind bars, Larry Harmon will be on probation for three years and also faces having to pay back a further $311,145,854, along with having to forfeit other seized cryptocurrencies, real estate, and monetary assets. He has already been fined $60 million by the US Treasury Department’s Financial Crimes Enforcement Network.

At that time, that was FinCEN’s first-ever enforcement against a cryptocurrency mixer, and in 2023 the agency proposed increasing oversight of mixing services by requiring operators to report all transactions to the government. No decision has yet been made on the matter. ®