Crackdown on Cryptocurrency Crime
In a significant crackdown on cryptocurrency-related crime, U.S. authorities have completed the legal seizure of over $400 million in assets associated with Helix, a notorious darknet crypto mixing service. This final forfeiture occurred after a federal judge issued a ruling on January 21, granting the government possession of the seized assets.
Operations of Helix
Helix, which started its operations in 2014, was notorious for facilitating the laundering of proceeds from illicit online markets, processing approximately 354,468 Bitcoin, valued at about $311 million at the time of its operations, the Department of Justice (DOJ) revealed in a statement. The service primarily functioned by pooling and redistributing funds, effectively concealing the origins and destinations of cryptocurrency transactions—a tactic that has made tracing such transactions exceedingly difficult.
The service’s operator, Larry Dean Harmon, designed Helix to work alongside major darknet markets, charging fees for his services and successfully obscuring the origins of a substantial amount of money linked to online drug sales and other criminal activities. According to the DOJ, Harmon retained a portion of the funds transacted through Helix as compensation for his services within this illicit financial ecosystem.
Expert Insights
Ari Redbord, an expert in the field and global head of policy at TRM Labs, emphasized that Helix was not merely misused but was specifically designed for laundering money derived from darknet operations. He commented that dismantling such operations disrupts the criminal infrastructure, adding friction to the money-laundering process and forcing criminals to seek out riskier alternatives.
Legal Actions Against Harmon
The DOJ’s civil action against Harmon was predicated on his violations of the Bank Secrecy Act during the time he operated Helix from 2014 to 2017. Prosecutors contended that Harmon managed Helix without proper registration as a money services business, failing to implement required anti-money laundering protocols or submit suspicious activity reports as mandated by law.
Harmon later transitioned to become the CEO of Coin Ninja, another registered money services entity offering cryptocurrency exchange options and promoting a separate mixing feature. His new venture, DropBit, was marketed as a method to send Bitcoin through text or social media, circumventing Know Your Customer (KYC) regulations, according to an earlier civil case from 2022.
Broader Implications
The investigation also revealed that Helix played a role in facilitating financial transactions linked to drug trafficking, fraud, child exploitation, and extremist activities. Harmon faced criminal charges in 2019, entered a guilty plea in 2021 for conspiring to launder money, while he also had an outstanding civil penalty from the Financial Crimes Enforcement Network (FinCEN) since October 2020, which remains unpaid.
