Helix CEO Larry Dean Harmon pleaded guilty to one count of conspiracy to launder monetary instruments today, CoinDesk reported, after the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) accused him of helping criminals launder hundreds of millions of dollars via a process called Bitcoin mixing.
FinCEN said in October 2020 that Harmon "conducted over 1,225,000 transactions for customers and is associated with virtual currency wallet addresses that have sent or received over $311 million" via Helix between 2014 and 2017. But he never registered Helix or his other company, Coin Ninja, as money services businesses.
Helix also "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," according to FinCEN, which also said that Harmon "engaged in transactions with narcotics traffickers, counterfeiters and fraudsters, as well as other criminals."
All of those factors led to Harmon being the first person charged in the U.S. for offering a Bitcoin mixing service. But what exactly is Bitcoin mixing? It's essentially a cooperative effort to make Bitcoin more private by combining a bunch of people's funds into one transaction that is later split evenly among all the participants.
"Basically, if a hundred users all send exactly 0.1 BTC to a new address they control, and then merge these 100 transactions into one big transaction, everyone gets 0.1 bitcoin back, but no one can see where they got it from," Bitcoin Magazine explained, adding that these mixers "can be designed in such a way that not even the entity that 'merges' the transaction can figure out which coins went where."
Not everyone — and perhaps not even the majority — of Bitcoin owners who use mixers are looking to launder money. Some might simply be looking to increase the privacy of their transactions based on their principles rather than the practical desire to evade law enforcement agencies, financial regulators, and others.
But there's no denying that Bitcoin mixers, much like the dark web Antinalysis blockchain analysis service, do appeal to cybercriminals. The question now is if FinCEN and other financial regulators will target more Bitcoin mixing service providers now that the case against Harmon has set a precedent.
As for Harmon: FinCEN issued him a $60 million penalty in October 2020. The charge to which he pleaded guilty carries a maximum sentence of 20 years in a federal prison, and according to CoinDesk, his lawyer said that he will also be subject to "a large and lengthy forfeiture agreement."
Arresting guilty bank officials is up to country where they live. Where politics kick in - those persons are relatives to someone's someone, know something about country higher rank officials etc. Business as usual.