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The Courts Bitcoin Crime The Almighty Buck

Ohio Man Arrested For Running Bitcoin Mixing Service That Laundered $300 Million (zdnet.com) 79

Posted by BeauHD from the first-of-its-kind dept.
U.S. authorities have arrested Larry Harmon of Akron, Ohio, for running a "Bitcoin mixer" service on the dark web that helped criminals disguise the origin of Bitcoin transactions. Harmon is "accused in a three-count indictment (PDF) for operating Helix, an online website located on the dark web," reports ZDNet. It is the first case the DOJ has brought against a Bitcoin mixer. From the report: Helix functioned as a Bitcoin mixer (Bitcoin tumbler), a type of service that takes funds from a user, split the sum into small parts, and using thousands of transactions, sends and reassembles the original funds at a new Bitcoin address, in an effort to hide the original funds under a cloud of micro-transactions. "The sole purpose of Harmon's operation was to conceal criminal transactions from law enforcement on the Darknet, and because of our growing expertise in this area, he could not make good on that promise," Don Fort, Chief, IRS Criminal Investigation, said today in a DOJ press release. "Working in tandem with other sites, he sought to be the 'go-to' money launderer on the Darknet, but our investigators once again played the role of criminal disrupters, unraveling the interlinked web from one tentacle to another," Fort said.

According to DOJ documents, Harmon ran Helix as a secondary project attached to his primary service called Grams, a search engine that aggregated listings from multiple dark web drugs-related marketplaces. Grams allowed users to search for drugs and find the cheapest offers in their areas. Helix was provided as a way for potential buyers to hide their identity when buying products. The DOJ says Harmon operated Helix since 2014 and helped launder more than 350,000 bitcoins, valued at around $300 million at the time of their transactions -- valued $3.5 billion today. Investigators say that as the service grew, Harmon also partnered with other dark web services. According to the indictment, Harmon joined forces with AlphaBay, the biggest dark web marketplace for illegal products at the time, with AlphaBay recommending Helix to its users as a safe Bitcoin tumbling option.
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Ohio Man Arrested For Running Bitcoin Mixing Service That Laundered $300 Million More

Ohio Man Arrested For Running Bitcoin Mixing Service That Laundered $300 Million

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  • If you plan to run a money laundering business for bitcoins, do it in Generistan where the police has better things to do than hunt down criminals that only affect people abroad.

    I wish I was joking. Ever tried to get legal assistance in a country like that? I tell you, if even Interpol can't get shit done, you're fucked.

    • If you plan to run a money laundering business for bitcoins, do it in Generistan where the police has better things to do than hunt down criminals that only affect people abroad.

      His main problem is he went too small. $300,000,000 isn't enough. If you're big enough and launder enough money (HSBC) the worst you'll get is a slap-on-the-wrist fine and will be allowed to go about your business unmolested by law enforcement.

    • Yeah, it's not that they don't care, it's that they don't care as long as they get their cut.

  • Comment removed based on user account deletion

    • There aren't enough moms involved in collecting and trafficking in them, hence the authorities are far less forgiving than they are with real beanie baby hustlers.

  • Spent more time verbosely applauding themselves than detailing how what he did was a crime.

    • Don't know what money laundering is, do you? It's in the title of the story. Might want to look it up. There's this thing called the interwebs which gives you vast amounts of information at your fingertips.

  • Again I have to ask. Wasn't the point of Bitcoin that you can you avoid stuff like this? Why bother if the authorities can still track you whenever they want and nail you for doing whatever they don't like? Or shutdown the whole thing whenever they want like China is threatening to do? Might as well use regular money.

    • Re:Whats the point? (Score:5, Informative)

      by gweihir ( 88907 ) on Friday February 14, 2020 @06:49AM (#59727436)

      Bitcoin is the very anti-thesis of anonymous. All transactions are kept forever in it. As soon as a wallet-owner is identified, you can easily see anything done with that wallet. Hence the mixing-services.

      Monero, for example, is a crypto-currency that aims at being anonymous, but from what I read about it, it is not doing so well either.

      • Re: (Score:3)

        by rtb61 ( 674572 )

        Never to forget of course, what ever a computer can complexify another computer, especially a far more powerful one, can uncomplexify. The hidden story in here, all those laundered bitcoins and the launderer himself will point straight back to those who wanted the ill gotten proceeds laundered. They would have put a lot of effort into this guy and not to get him but to get everyone he leads to. Anyone who did business with this guy has every reason to be very worried.

        • Re: (Score:2)

          by gweihir ( 88907 )

          Aeh, what? If a mixer does not keep records, there is no way to reverse the mixing. That is a mathematical fact and has nothing to do with the computing power available.

      • Re: (Score:2)

        by JeffSh ( 71237 )

        Ironically, because monero is better at being anonymous, it cant be listed by major exchanges because it doesn't and cant conform to KYC.

      • Re: (Score:2)

        by JeffSh ( 71237 )

        what will and should end up happening is that bitcoin is the public ledger of all transactions, and some of us my choose to remain our own banks, if we want to, but most of us will transact through banks and payment processors, who won't have to commit all transactions to the public ledger. they will, eventually, but they will maintain their own internal ledgers.

    • Bitcoin, wallets are anonymous, as they are basically public/private keys. However, any and all transactions between wallets are logged forever and are available for anyone to see. With this in mind, coupled with good detective work, it can be trivial to find who moved what currency where.

    • Re: (Score:2, Insightful)

      by NFN_NLN ( 633283 )

      > Again I have to ask. Wasn't the point of Bitcoin that you can you avoid stuff like this?

      Authorities CAN'T shut down Bitcoin because it's decentralized (but not necessarily anonymous).
      They CAN shut down a person, because people are not decentralized. And putting them in jail works.

  • As long as law enforcements have backdoors into major online wallets, they can trace each transaction to a physical IP address. That's why people need to stop using online wallets and maintain their own chains.
  • Today I learned that it's illegal to keep your transaction history secret...
    Why are banks still private tho?

    • Re: (Score:1, Insightful)

      by Cmdln Daco ( 1183119 )

      It's illegal to operate a business that is almost wholly involved in or facilitating money laundering.

      But your confused comment is understandable.

    • Banks share everything with the government. Why do you think they took your SSN when you opened your account?

      But of course, what they are nailing him on is enabling/encouraging other crimes. Because it's legal to drive a car, but it's illegal to drive the getaway car from a bank robbery.

    • The whole point of bitcoin is to keep your transaction history public and traceable.

      The illegality here is not trying to obfuscate transaction history, but rather for trying to hide the fact that the bitcoin was used to transact drug deals.

  • When the US IRS says "Growing Expertise" what they are really saying is

    "We got really lucky this time and found somebody we could indict.
    We have no clue about bitcoin or anything really, but since we don't
    PAY for our lawyers... the PUBLIC does... we can go after anyone
    anytime and one day we will catch someone! Also if you know of anyone
    we offer a percentage so call us now. Toll-free (call paid for by legitimate
    taxpayers for every minute)."

    The IRS would be better off publishing and going after Donald Trump

  • I'll confess to not really following the whole digital coin craze very closely, but I don't get why you would need such a complicated service to anonymize a bitcoin. All I would need to do is open a bitcoin member pool. Members would deposit coins into the pool, and immediately, as a business, I can just not care which coins came from which member. When a member requests to withdraw or spend a coin, I give them a coin from the pool. Sure, a single coin sitting in the pool is traceable to any given user,
    • That's essentially what a tumbler does: mixing up coins from various sources into a common pool, and returning to each depositor a random selection of coins from that pool (into a fresh "burner wallet"). The "thousands of transactions" aren't meant to obfuscate the source of each coin by themselves (the ledger keeps a perfect track of everything), they are just a necessary byproduct of splitting each deposit and mixing up the coins.

      It doesn't really matter if all the money in the pool is used for illega

    • That would require A LOT of trust in the operator of that pool who could vanish with everyone's money at any time pretty easily.

      • I think history has shown repeatedly that a big problem with bitcoin is that the "banks" tend to vanish and/or abscond with all the coins.

    • Re: (Score:1)

      by AHuxley ( 892839 )
      Re "get why you would need such a"
      The NSA had OAKSTAR, MONKEYROCKET to track types of cryptocurrencies in use globally and years ago.

  • All the experts on slashdot claim that bitcoin isn't a real currency and its worthless. How could he have committed any crimes with tulips?

    • All the experts on slashdot claim that bitcoin isn't a real currency and its worthless. How could he have committed any crimes with tulips?

      Because of its volatility and limited supply, it doesn’t function well for its original purpose, which was an international digital currency. But services like Helix make it attractive to criminals as anonymous cash.

    • Because if you take your billion dollars in coke money and cycle it through a flower shop to clean it, the flower shop owners are still going to jail. This is really basic stuff. The headline title even says "money laundering". It does not say ''bitcoin is therefore a real currency just like tulips". I'm not going to google the legal definition of money laundering for you.

  • By making those traceable transactions anonymous, mixers are what makes Bitcoin evil. Although I’m not a fan of applying money laundering laws to as many banking transactions as the DOJ can get its hands on, the only reason for using a mixer is to make your ransomware service, kidnapping ring or child porn bazaar untraceable.

    But before this site was revealed and shut down, were the authorities able to identify and trace its customers? We could clean up the whole bathtub ring around the Internet that

  • Maybe I'm being completely clueless here? But if Bitcoin isn't considered legal U.S. tender? If it's not an officially recognized and government backed currency? How can the FBI make an arrest and charge the guy with money laundering for mixing Bitcoin transactions to try to anonymize them?

    • The only US legal tender is US dollars. You still can money launder using Euros, or gold bricks, or shares of IBM. Or, in this case, Bitcoin.

  • Bozo? (Score:3)

    by fuzznutz ( 789413 ) on Friday February 14, 2020 @11:20AM (#59728062)
    Is this Larry Harmon of Bozo the Clown fame?

  • Hopefully justice occurs here (Score:3)

    by Shaitan ( 22585 ) on Friday February 14, 2020 @12:04PM (#59728206)

    The sole purpose of a mixing service is anonymity and criminal activity is NOT the sole purpose of anonymity.

    • The sole purpose of a mixing service is anonymity and criminal activity is NOT the sole purpose of anonymity.

      There are many other purposes for anonymity. For anonymity in financial transactions, however, the purpose is clearly criminal.

      • So every time you pay for lunch or groceries with cash you are up to something nefarious, then?
        Plus every time you sell your couch on craigslist for cash.
        • Stop being disingenuous. Obviously there are trivial exceptions. What we're talking about here is a person who set up a business for the purpose of anonymizing BitCoin transactions, and attempted to anonymize 300 million dollars worth of transactions. Anyone trying to make the philosophical argument that this might have been for the purpose of anonymity, absent criminality, is being as ass.
          • The US government does this. It started with the cold war when the Government wanted to hide spending for certain weapons projects because they were afraid the Soviets would figure what was being built based on how much was spent. I think it is 'project blank check' or something like that. The US government willfully obscures spending. Probably still does so. Thus it is good and legal for government to obscure spending but unlawful for the public to do so.

      • Re: (Score:2)

        by Shaitan ( 22585 )

        "For anonymity in financial transactions, however, the purpose is clearly criminal."

        False. The reasons are much the same with regard to financial transactions. It could be anything from infidelity to shyness.

        Not to mention civil disobedience. Since corporations run the world civil disobedience is commonly using the black market to create competition or defiance of the state protected monopolies. Examples include civil disobedience against the war on drugs and toward the copyright cartels. You might call civ

  • Actual charges from TFA

    ... did ... violate: Title 18. united States code, Section 1956(a)(l)(A)(i), by conducting and attempting to conduct financial transactions affecting interstate commerce, that is, the sending and receiving of bitcoin transactions, which involved the proceeds of specified unlawful activity...

    From in or about July 2014 until in or about December 2017, HARMON knowingly conducted, controlled, managed, supervised. directed, and owned an unlicensed money transmitting busiaess, that is. Heli

    • In fact, Bitcoin is explicitly NOT money under US and many countries' tax law.

      So Bitcoin is money when prosecuting exchanges, but is not money for the purposes of taxation.

      Seems like government is trying to have its cake and eat it too in this case.

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