U.S. federal prosecutors have indicted Larry Dean Harmon on money laundering charges associated with the ‘Grams-Helix’ dark web operation.
Harmon allegedly facilitated illegal transactions worth over $300 million in cryptocurrency and is currently facing up to 30 years in prison if found guilty.
Harmon Accused of $311 Million Crypto Money Laundering
According to local news outlet cleveland.com, the U.S. Department of Justice has charged Coin Ninja CEO Larry Harmon with conspiracy to launder monetary instruments. Harmon allegedly operated a dark web service that facilitated the laundering of more than $300 million in crypto believed to be used by criminals for illegal transactions and purchases on darknet marketplaces.
Harmon owned and operated a service dubbed Helix, an internet-based money transfer business that provided customers with bitcoin mixing capabilities to conceal the origin of their transactions. The Coin Ninja CEO owned another service called Grams, a Darknet search engine that operated in conjunction with Helix and was often referred to as Grams-Helix.
According to the prosecutors, Helix existed for the purpose of obscuring crypto transactions from law enforcement agencies. Harmon also reportedly partnered Helix with the dark web marketplace AlphaBay to provide money laundering services for its customers. An excerpt from the indictment reads:
“From at least in or about November 2016, Helix partnered with the Darknet market AlphaBay to provide bitcoin money laundering services for AlphaBay customers. In or about November 2016, the AlphaBay website recommended to its customers that they use a bitcoin tumbler service to “erase any trace of [their] coins coming from AlphaBay,” and provided an embedded link to the Tor website for GramsHelix.”
Furthermore, federal prosecutors claim that Harmon’s Helix service facilitated the exchange of some 354,468 bitcoins worth about $311 million at that time. A large part of the crypto sent through Helix also allegedly originated from Dark web marketplaces such as AlphaBay, Agora Market, and Nucleus which are notorious for selling illegal items.
The prosecutors are currently seeking millions of dollars in financial penalties and an immediate freeze on all of Harmon’s digital assets.
Court Denies Harmon Bail
Harmon was initially arrested in December 2019 following investigations by the FBI and IRS into his involvement with the darknet marketplace AlphaBay.
The grand jury of a federal court in Akron, Ohio then unsealed his case on Thursday (February 6, 2020) as federal prosecutors prepared to file new evidence.
U.S. Magistrate Judge Kathleen Burke has now deemed Harmon a flight risk based on evidence provided by federal prosecutors and ordered that bail be denied.
Also, Judge Burke has ordered the case to be sent to Washington, D.C. for prosecution. Should Harmon be convicted, the Coin Ninja CEO and owner of Harmon Web Innovations faces as much 30 years in prison.
Commenting on a Twitter thread posted by bitcoin podcaster Peter McCormack on Thursday (February 13, 2020), general counsel at Decentralized Finance (DeFi) Jake Chervinsky said:
1/ Re: Dropbit…
…CEO Larry Harmon has been arrested and is currently in Youngstown Ohio federal jail.
– Conspiracy to launder money instruments
– Operating an unlicensed money transmitting business
He faces up to 30 years.
— Peter McCormack????☠️ (@PeterMcCormack) February 13, 2020
“It’s important to remember the presumption of innocence, but DOJ at least alleges he was directly involved in criminal activity & intended to launder the proceeds of crime. That makes it a tough case. But DOJ is going too far by charging unlicensed money transmission offenses.”
Cryptocurrencies have been associated with the dark web as far back as 2011 when Ross Ulbricht created the now-defunct Silk Road.
Over its three years of existence, the free market placed facilitated an estimated $1 billion in bitcoin transactions, as reported by Blockonomi.
The U.S. Justice Department announced the arrest of Ohia resident Hugh Brian Haney back in July 2019. As part of his arrest, authorities reportedly confiscated $19 million worth of bitcoin allegedly laundered through the Silk Road darknet marketplace.
A 2020 report from blockchain analysis firm Chainalysis indicated that crypto transactions in darknet marketplaces grew an estimated $500 million in total transaction value in 2019.
However, the same report also pointed out that these transactions accounted for less that one percent of all crypto-economy transaction activity throughout 2019. This is a clear indication that a compelling majority of crypto is utilized for legal purposes and non-illicit transactions.