DOJ charges Ohio man for running $300M Bitcoin-laundering operation


TS Addict
Staff member

When it comes to cryptocurrency, there's a big group of users who are deeply invested in the ecosystem for its potential to act as an alternative financial platform to banks. However, cryptocurrencies often attract criminals, who want to use them to conduct transactions that fly under the radar of the authorities.

Today, an Ohio man was arrested for operating a "Bitcoin mixer" on the dark web, which was essentially a cryptocurrency laundering service. Federal authorities have charged Larry Harmon for "tumbling" no less than $300 million worth of Bitcoin through an unlicensed service called Helix, which is known to have partnered with dark web marketplace Alphabay that was shut down in 2017.

Between 2014 and 2017, Harmon took funds from various people, split them into many small parts and moved them in various wallets. From there, the funds would get reassembled into the original amount in a different Bitcoin wallet, a process that in theory should have concealed the origin of 350,000 Bitcoin used by criminals.

The problem with that thinking is the Bitcoin blockchain is much more transparent than you'd think, and while tracing transactions isn't necessarily easy, all of them are permanently stored in the Bitcoin network. Some alternatives to Bitcoin that focus on privacy are Monero and Zcash, but even those can still be tracked through clever means.

There are companies like Chainalysis that make it their mission to make it easy to link digital identities -- which are random-looking strings of characters -- to the people that use them. Another is CipherTrace, which have even gone as far as infecting their own systems with ransomware in order to trace the Bitcoin used in paying cybercriminals.

DC Attorney Timothy Shea noted that "For those who seek to use Darknet-based cryptocurrency tumblers, these charges should serve as a reminder that law enforcement, through its partnerships and collaboration, will uncover illegal activity and charge those responsible for unlawful acts."

Just two months ago the DOJ arrested four men involved in a $722 million cryptocurrency fraud, so even if your intention is to invest in the ecosystem as a way to make additional income, it's not always a good idea. Cryptocurrencies are likely to become important financial instruments in the future, but in the meantime they're a multi-billion dollar playground for thieves, fraudsters, and criminals looking to conceal their activities.

Permalink to story.

So now we know that....

1. Bitcoin is traceable
2. It is not free to exchange
3. It is not suitable for goods exchange due to extreme volatility.

So what good is it for then? Probably this:

1. Melting graphics cards and polar caps
2. Running organized pump-and-dump schemes
3. Money laundering
4. Treating your money like in the South Park...

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TS Evangelist
Everyone already knew BC was traceable - that's kind of a cornerstone of the entire concept. We also knew it had become the favored means of laundering large amounts of money because it exposes the clients to minimal risk. The middleman, however, faces a LOT of risk unless he has connections covering for him. That's why its generally only governments or large criminal cartels who can get away with these operations for extended periods. I know a guy who still thinks crypto is the future but he only deludes himself that way because he's got a chronic allergy to paying taxes.