Bitcoin Mixing Service Operator Hit With $60 Million Fine

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  • The founder of Bitcoin mixing services Helix and Coin Ninja, Larry Dean Harmon, has been fined $60 million by FinCen
  • Harmon operated the mixing services concurrently from 2014 to 2017, mixing over $120 million worth of Bitcoin
  • Bitcoin mixer services are not illegal to use but they are illegal to operate in most countries

The founder of Bitcoin mixing services Coin Ninja and Helix has been handed a whopping $60 million fine by Financial Crimes Enforcement Network (FinCen). Larry Dean Harmon, who also created cryptocurrency wallet provider DropBit, was arrested in February on money laundering charges which have resulted in the huge fine, although he has avoided jail. Helix allegedly conducted over 1.2 million Bitcoin mixing transactions between 2014 and 2017, while Coin Ninja operated from 2017 to the time of Harmon’s arrest.

Harmon “Willfully Violated” Regulatory Measures

FinCen states in their judgement that both Helix and Coin Ninja were acting as “money transmitters” and “financial institutions”, and that in operating Helix Harmon “willfully violated the BSA’s registration, program, and reporting requirements” as well as claiming that he “openly flaunted existing regulatory requirements.”

Harmon launched the Helix Bitcoin mixer in June 2014, and it soon became a favorite of the AlphaBay darknet site, who implemented its services into its site. This no doubt helped his business, which saw $120 million worth of Bitcoin being mixed between its launch in June 2014 and December 2017 when it ‘closed’, although it created and controlled Coin Ninja until February this year.

Bitcoin Mixing Operates in Legal Gray Area

Bitcoin mixing, also known as Bitcoin tumbling, is a complex legal area. Generally speaking, using a Bitcoin mixing service is legal although operating one, as Harmon has found out, is viewed differently. This is because offering an unregistered financial service is more ‘damaging’ than using one, which is why law enforcement come down harder on Bitcoin mixing operators rather than users, unless of course the proceeds being ‘tumbled’ are known to be from illegal means.