The Financial Crimes Enforcement Network has assessed a civil money penalty of $60 million against Larry Dean Harmon for violations of the Bank Secrecy Act and the regulations promulgated to implement the Act. Harmon is the founder, administrator, and primary operator of two convertible virtual currency “mixers" or “tumblers,” Helix (until 2017) and Coin Ninja.
According to FinCEN, Helix, and later Coin Ninja, operated as unregistered money services businesses,* processing hundreds of thousands of bitcoin transactions without registering as such, without reporting suspicious activities, and without implementing or maintaining an effective anti-money laundering program. FinCEN found that Harmon had deliberately disregard BSA requirements and, indeed, had actively circumvented the law by deleting customer information, and by failing in most cases to verify and record customer names and addresses for over 1.2 million transactions, while engaging in transactions with fraudsters, narcotics traffickers and counterfeiters. FinCEN determined that Helix actively marketed its services to criminals, working in conjunction with darknet marketplaces to launder illicit bitcoin proceeds.
This enforcement action represents the first time FinCEN has imposed a monetary penalty on a virtual currency mixer.
In a related action, the US Department of Justice filed an indictment in December 2019 charging Harmon with conspiracy to launder money in violation of 18 USC § 1956, operation of an unlicensed money transmitting business in violation of 18 USC § 1960 and DC Code § 26-1023(e) 1960, along with federal forfeiture claims, in connection with the operation of Helix.
* FinCEN guidance from 2013 and 2019 defines exchangers and administrators of convertible virtual currency mixers and tumblers as money transmitters within the meaning of the BSA, and fully subject to the reporting and recordkeeping requirements of the law.