Larry Harmon, the CEO of Coin Ninja, was arrested earlier this week. Authorities suggest that he was involved with AlphaBay, a darknet marketplace, in a $300 million money laundering conspiracy. Harmon’s family has denied his connections with the darknet website.
Creator of Helix
Interestingly, Harmon is also the creator of Helix, a Bitcoin mixing service. Mixing services break Bitcoin transactions into smaller amounts which makes them hard to trace.
The prosecutors from the Department of Justice suggest that Helix was a “money transmitting and money laundering business.” In the indictment, they noted that Helix charged customers to send Bitcoins to recipients in a way that helps conceal the original source or sender of those coins.
Is the DOJ right in its assessment?
Justice Department Assistant Attorney General Brian Benczkowski stated on Thursday,
“This indictment underscores that seeking to obscure virtual currency transactions in this way is a crime.”
However, Gary Harmon, brother of Larry Harmon and a Coin Ninja coworker, said that Helix has no direct partnership with AlphaBay. He also noted that the darknet market recommended Helix without getting Larry’s explicit permission or input. Note that AlphaBay was seized by the FBI in July 2017, around the same time when Helix shut down.
Gary noted that Larry’s wife Margot has been receiving threatening texts and phone calls since the arrest. She says that the harasser knows her home location, and she doesn’t feel safe there anymore. He said that due to the FBI’s public disclosure, people believe that they have some hidden money. He added that the FBI has no proof against their allegations and are putting their family in danger.
Larry has been denied bail because of concerns related to flight-risk, and his assets have also been frozen. The family had to start a GoFundMe campaign to manage their expenses during the trial. All of Larry’s hardware wallets were confiscated by the authorities and Gary claims that they don’t have any more Bitcoin.
The DOJ and Belize National Police Department searched and trashed both of Gary’s homes. Experts in the Bitcoin industry are concerned that simply developing a Bitcoin mixer could be seen as an act of money laundering by the authorities. Even Matt Corallo, Bitcoin Core contributor, tweeted that if a Washington DC federal court upheld their accusation, it could be the “beginning of the end.