U.S. sues crypto ‘mixer’ to recover $60 million government penalty

U.S. sues crypto ‘mixer’ to recover $60 million government penalty

  • Penalty imposed in 2020 over claims of anti-money laundering violations
  • Founder pleaded guilty in related criminal case in D.C.

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

The lawsuit was filed in Washington, D.C., federal court against Larry Harmon of Ohio who ran a cryptocurrency “mixer,” or “tumbler” called Helix, an anonymizing service that U.S. authorities said could send virtual currency in a way that concealed the source or owner.

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

Register now for FREE unlimited access to Reuters.com

Last year, Harmon pleaded guilty to a money laundering conspiracy charge in U.S. District Court for the District of Columbia. He has not been sentenced.

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

In court filings 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 statement in 2020, FinCEN said its “investigation demonstrated that Mr. Harmon deliberately disregarded 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 $311,000 restitution order, court records show. The authorities seized various bitcoin “wallets” from Harmon as part of the criminal investigation.

Harmon’s sentencing was deferred, pending cooperation with the U.S. that the government said last month “remains active and ongoing.”

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

For the U.S.: Brian Hudak of the U.S. Attorney’s Office

For Harmon: No appearance yet

Read more:

How crypto giant Binance became a hub for hackers, fraudsters and drug traffickers

Crypto exchange Bittrex to pay $29-mln penalty to U.S. Treasury Department

Cryptocurrency and anti-money laundering enforcement

U.S. Justice Dept launches new initiatives on cryptocurrencies, contractor hacks

Register now for FREE unlimited access to Reuters.com

Our Standards: The Thomson Reuters Trust Principles.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *