The United States Financial Crimes Enforcement Network, or FinCEN, has just hit Larry Dean Harmon with $60 million in civil penalties for operating an unregestered Money Service Businesses (MSB). FinCEN alleges that Harmon was behind the Lightning Network Wallet Dropbit, as well as Bitcoin tumblers Coin Ninja and Helix.
FinCEN’s investigation has identified at least 356,000 bitcoin transactions through Helix. Mr. Harmon operated Helix as a bitcoin mixer, or tumbler, and advertised its services in the darkest spaces of the internet as a way for customers to anonymously pay for things like drugs, guns, and child pornography. Mr. Harmon subsequently founded and acted as Chief Executive Officer of Coin Ninja, which operated as an unregistered MSB and in the same manner as Helix.
Why it matters: The recent move by FinCEN to punish mixer operators falls in-line with US Department of Justice (DoJ) statements on crypto policies. While many people within the US government are doing their best to express their support for blockchain development, there appears to be opposition growing to any kind of anonymous digital money. As Bitcoin grows in popularity and acceptance, governments will probably keep pushing in this direction, and looking for ways to eliminate private forms of payment. Unfortunately for regulators and law enforcement agencies, mixers can easily be operated from off-shore destinations, which makes effective enforcement impossible.