On October 19, 2022, the U.S. Attorney’s Office for D.C., on behalf of the Financial Crimes Enforcement Network (“FinCEN”), filed a civil complaint against Larry Dean Harmon (“Harmon”), seeking $60 million in civil penalties for alleged violations of the Bank Secrecy Act (“BSA”) in connection with Harmon’s involvement in now-defunct cryptocurrency services Helix and Coin Ninja LLC. The complaint seeks to obtain a judgment on FinCEN’s 2020 Assessment of Civil Money Penalty against Harmon (“Assessment”), which is attached to the complaint and includes a detailed statement of facts.
As we have blogged, Harmon previously pled guilty to operating an unlicensed money transmitter business. Harmon’s sentencing hearing in the criminal case has been continued, and he reportedly has been attempting to cooperate with the government. It appears that the civil complaint may represent something of a formality: it seeks to reduce the assessment against Harmon to an actual civil judgment, upon which the government can collect in theory, in anticipation of Harmon’s criminal sentencing and any potential additional matters in which he may attempt to cooperate.
According to the complaint, starting in 2014, Harmon operated Helix, a bitcoin “mixing” service, which Harmon allegedly advertised explicitly as a way for customers to conceal their identities from the government. The statement of facts attached to the Assessment alleged that Harmon “publicly advertised Helix on Reddit forums dedicated to darknet marketplaces, actively seeking out and facilitating high-risk transactions directly through customer service and feedback.” Such “mixing” services – designed to maximize anonymity – increasingly have drawn the ire of the government, as reflected by the recent and controversial action by the Office of Foreign Assets Control to sanction virtual currency “mixer” – or passive technology – Tornado Cash.
Continue Reading DOJ Files Lawsuit for $60 Million in Civil Penalties for Alleged BSA Violations by Crypto “Mixer”