20 Oct 2020
A bureau of the U.S. Treasury Department Monday imposed a $60 million penalty on Larry Dean Harmon, operator of the bitcoin “mixers” Helix and Coin Ninja, for allegedly violating anti-money-laundering laws, the agency said.
The civil penalty against Mr. Harmon, who already faces charges from the U.S. Justice Department, is the first of its kind imposed by the Treasury’s Financial Crimes Enforcement Network against a virtual currency “mixer” or “tumbler”—businesses that charge customers a fee to send virtual currencies to a designated address in a manner designed to conceal the source or owner of the currency, according to the agency.
The enforcement action comes seven years after FinCEN first issued guidance requiring exchangers and administrators of convertible virtual currency to register as money-services businesses and to adopt anti-money-laundering compliance programs. The agency clarified in 2019 that financial institutions that are mixers and tumblers of convertible virtual currency must also comply with these requirements.
Charles Flood, a lawyer at Flood & Flood representing Mr. Harmon in the DOJ case, said Mr. Harmon wasn’t represented by counsel in the FinCEN matter.
Mr. Flood said, however, that the FinCEN action was similar to a portion of the DOJ criminal case, in that it “rests on an incorrect determination that a bitcoin tumbler was a ‘money transmitter’ pursuant to Federal law during the time period underlying the indictment,” he wrote in an email. “We look forward to explaining all of this to a D.C. jury in the criminal trial.”
Mr. Harmon didn’t immediately respond to a request for comment, nor did Helix. Efforts to reach Coin Ninja were unsuccessful.
Mr. Harmon, of Akron, Ohio, allegedly operated Helix as an unregistered money-services business, FinCEN said. Doing business as Helix, Mr. Harmon allegedly accepted and transmitted bitcoin from 2014 to 2017, according to the enforcement action.
FinCEN said Mr. Harmon openly marketed Helix as a service that didn’t conduct customer due diligence and did more than $311 million worth of transactions in virtual currencies.
Mr. Harmon later founded and acted as the chief executive officer of Coin Ninja from 2017 to 2020. FinCEN said Coin Ninja operated in the same manner as Helix, including as an unregistered money-services business.
By Mengqi Sun, The Wall Street Journal, 19 October 2020
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