Bitcoin mixer operator slapped with a penalty of $60 Million

October 20, 2020
By Sam Grant

Larry Dean, who is also facing money laundering charges, has been penalised with a $60 million fine by the Financial Crimes Enforcement Network (FinCEN)

It is the first time the FinCEN has levied a penalty against a Bitcoin mixer, as detailed in a press release. Larry Dean, the owner of Helix and Coin Ninja, has been charged with criminal money laundering.

The controversy around Bitcoin mixers

Bitcoin mixers are used to jumble individual users’ coins with other users’ coins to preserve transaction privacy. Mixers have been perceived illegal by the US Department of Justice (DoJ), more so when used to conceal illegal activities. The bitcoin mixing services have been an uncomfortable subject in the cryptocurrency sector.

No one would, intentionally or accidentally, like to be in a situation similar to Larry Dean’s, so there’s an inherent desire to avoid any activity or operation related to it. Today, many exchanges have started blocking user accounts with any transactions connected or linked with mixers.

Larry Dean Harmon’s involvement

It is alleged that Dean had a hand in obscuring the origin of more than $300 million in Bitcoin AlphaBay darknet users between 2014 and 2017.  The Financial Crimes Enforcement Network claims that he achieved this via more than 1 million different Bitcoin transactions.

FinCEN reported that Dean ran Helix between 2014 and 2017 without registering the business. “The investigation demonstrated that Mr. Harmon deliberately disregarded his obligations under the [Bank Secrecy Act] BSA and implemented practices that allowed Helix to circumvent the BSA’s requirements. This included a failure to collect and verify customer names, addresses and other identifiers on over 1.2 million transactions”.

FinCEN added that Dean neither adhered to the anti-money laundering compliance nor kept transaction records. The bureau reports that he instead “actively deleted even the minimal customer information he did collect” including when he dealt with scammers and drug traffickers.

The investigation conducted by the enforcement network led to the discovery of about 356,000 Bitcoin transactions through Helix that was run by Dean.

The United States continues to push for more policies around crypto

The news about Larry Dean’s criminal activities comes when the United States’ federal government is struggling to usher in more stringent policies around cryptocurrency operations. The past warnings issued to cryptography and encryption services in regard to helping facilitate crimes in or involving the cryptocurrency sector seem to have landed on deaf ears. 

Law enforcement authorities have now started offering rewards to developers and FinTech experts to help combat crypto related crimes. Last month, the Internal Revenue Service made a post announcing that it was offering a reward of up to $625,000 to anyone who could manage to crack untraceable privacy blockchain like Monero and help in tracing Lightning Network transactions.