The Helix CEO’s guilty plea demonstrates how law enforcement views Bitcoin mixers as inherently criminal.
Larry Harmon of Ohio spent years running a Bitcoin mixer—a service that scrambles the origins of crypto transactions in a way that makes them difficult for law enforcement to trace—which led to his arrest in 2017 on conspiracy to commit money laundering charges.
Harmon pled guilty to money laundering charges in federal court in Washington, DC on Wednesday morning, after fighting the case for years.
The plea came on the eve of a trial in which Harmon planned to argue that his mixing service, Helix, was not a money-laundering tool, but rather a way to increase privacy and ease the use of Bitcoin.
His decision to plead guilty indicates that his privacy arguments were likely to fail in the face of government evidence that Helix primarily served dark web sites such as the now-defunct Alpha Bay, which served as a market place to buy illicit drugs and a variety of other illegal services.
During his time with Alpha Bay, Helix laundered approximately 354,468 Bitcoin—roughly $300 million at the time, but now worth billions of dollars.
“The sole purpose of Harmon’s operation was to conceal criminal transactions from law enforcement on the Darknet, and due to our growing expertise in this area, he could not make good on that promise,” Don Fort, chief of IRS Criminal Investigation, said after Harmon’s arrest.
Harmon’s decision to plead guilty demonstrates how law enforcement has come to regard crypto mixers, also known as tumblers, as inherently criminal, despite the fact that some people use them for legitimate purposes.
The Justice Department has yet to release information about Harmon’s plea argument, including the length of his prison sentence. Defendants frequently agree in such agreements to share details of criminal operations with law enforcement in order to reduce the length of their sentence. According to court records, Harmon is only pleading guilty to one count of conspiracy to commit laundering—the Justice Department appears to have dropped the other charges, which are related to operating an unlicensed money transmitter, as part of the plea agreement.
In addition to the criminal charges, Harmon has been hit with a $60 million civil penalty from FinCEN, the Treasury Department agency in charge of money laundering enforcement.