US sues crypto ‘mixer’ to recover $60 million from government

(Reuters) – The U.S. Justice Department on Wednesday sued the accused founder of a cryptocurrency “mixer” to recover a $60 million civil penalty imposed on him in 2020 by U.S. financial regulators for alleged failures to maintain an effective anti-money laundering program of money. .

The lawsuit was filed in Washington, DC, federal court against Larry Harmon of Ohio who ran a cryptocurrency “mixer” or “tumbler” called Helix, an anonymization service that US authorities said could send virtual currency in a way that concealed its source or owner.

The Financial Crimes Enforcement Network, an agency of the US Treasury Department, in October 2020 imposed a civil monetary payment of $60 million on Harmon for alleged violations of the federal Bank Secrecy Act (BSA). FinCEN, as the agency is known, alleged that Harmon operated an unlicensed money transmission business in connection with Helix.

Last year, Harmon pleaded guilty to one count of money laundering conspiracy in the US District Court for the District of Columbia. He has not been convicted.

Charles Flood of Houston’s Flood & Flood, an attorney for Harmon in the criminal case, did not immediately respond to a message seeking comment Thursday.

In court documents in the criminal case, Flood said “Harmon never set out to break the law, and if he had known in 2014 that operating a bitcoin tumbler was illegal, he never would have done it.”

A spokesman for the U.S. Attorney’s Office for the District of Columbia declined to comment. A representative from FinCEN did not immediately respond to a message seeking comment.

In a 2020 statement, FinCEN said its “investigation showed that Mr. Harmon deliberately ignored his obligations under the BSA and implemented practices that allowed Helix to circumvent the BSA’s requirements.”

FinCEN said Harmon failed to “collect and verify customer names, addresses and other identifiers” on more than 1.2 million bitcoin transactions from June 2014 to December 2017 valued at the time at $300 million.

In the criminal case, Harmon agreed to a restitution order of $311,000, court records show. Authorities seized various bitcoin “wallets” from Harmon as part of the investigation.

Harmon’s sentencing was postponed pending cooperation with the United States, which the government said last month “remains active and ongoing.”

The case is United States v. Larry D. Harmon (d/b/a Helix), US District Court for the District of Columbia, No. 1:22-cv-03203.

For the United States: Brian Hudak of the US Attorney’s Office

For Harmon: No appearance yet

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