They will require that he (and every other mixers in the US) collects those information from those who wants to get their coins mixed, so that in case there should be any case of hacking or such, they will be able to trace those people, even if they should make use of mixers to mix those coins to cover up.
I know that some people (just like me) are going to hate this, because they prefer having some privacy with their activities online, but these things are being done for security reasons, and I understand that. That’s why I never bother much, and after giving it a thought, I just agree with it. These laws don’t apply to every country, there are mixers that are in countries where there wouldn’t be laws like this one.
Topic: First Bitcoin Mixer Penalized by FinCEN for Violating Anti-Money Laundering Laws (Read 318 times)
October 28, 2020, 03:23:35 AM
October 27, 2020, 08:56:45 PM
I doubt that. KYC would completely negate the purpose of using a mixer in the first place.
People have been known to receive ads related to topics they mentioned out loud or through texts on phones. Also ads indexed according to items they recently bought in stores. Etc. AFAIK there are extensive networks of data mining which ID people using cookies, email addresses and other seemingly innocuous methods of tracking. Registering an email on a bitcoin faucet or allowing cookie tracking might be considered forms of KYC. A mixer wouldn't necessarily require a full KYC check. It could only need to participate in whatever information gathering networks exist, while disabling anonymizing services.I agree people can be deanonymized through cookies and other leakage of identifying information through browsers, and that this can be used to tie BTC transactions to real world identities. However, that doesn't mean collecting browser fingerprints or cookies is sufficient to comply with Fincen regulations.
This ties back to the article in the OP:
Quote
Specifically, the investigation demonstrated that Mr. Harmon deliberately disregarded his obligations under the BSA and implemented practices that allowed Helix to circumvent the BSA’s requirements. This included a failure to collect and verify customer names, addresses, and other identifiers on over 1.2 million transactions.
October 27, 2020, 06:21:22 PM
Not many may be aware that proxies, vpns and tor nodes are often run by businesses with connections to intelligence agencies like the FBI, NSA, CIA. Its an industry standard for virtually anything IT related.
I think this point is a bit misleading. VPN's are regularly used to connect to a local network within a company and that type are very unlikely to be of interest to the intelligence agencies. Proxies can also be used for both good and bad. However TOR nodes tend to have a slightly different reputation and are not commonly used in general commercial enterprises. Grouping them all up is a bit unfair. In response to the main piece of news: these bitcoin mixers literally have no other purpose than to disguise the source of funds, which is pretty much the definition of money laundering and it was always going to end up badly for them. Kind of glad that law enforcement have finally taken some action, as it has been going on for years.
Security researchers have spent more than the last 10 years trying various methods to break TOR. Here's a classic example from 2007:
I doubt that. KYC would completely negate the purpose of using a mixer in the first place.
People have been known to receive ads related to topics they mentioned out loud or through texts on phones. Also ads indexed according to items they recently bought in stores. Etc. AFAIK there are extensive networks of data mining which ID people using cookies, email addresses and other seemingly innocuous methods of tracking. Registering an email on a bitcoin faucet or allowing cookie tracking might be considered forms of KYC. A mixer wouldn't necessarily require a full KYC check. It could only need to participate in whatever information gathering networks exist, while disabling anonymizing services.
October 27, 2020, 03:01:28 PM
Even silkroad was disbanded and they did basically everything right but with one or two mistakes and you could be at the end of the world and they will find you.
Mistake #1, administering the Silk Road from the US. You may have noticed Harmon (operator of Helix) did the same thing. Smarter operators are doing so from within countries that do not extradite to, or cooperate with, the US government. That makes it a completely different ball game.
The thing about Harmon's Helix mixer is he introduced it as some form of anonymizing payments for criminals to take advantage to which make his service in itself as a form or accessory for the crime being committed, this thing alone will just make them guilty of a crime. For normal mixers who just promotes their mixing service as a way to protect your privacy is something that won't alarm anyone, yes it still might be used by some criminals but it doesn't raise any flags as they aren't really directly connected to any kind of crime. So mixers as a whole might not be affected here.
Mixers who don't advertise themselves as a money laundering service still have Fincen regulations to consider. They probably couldn't be charged with the conspiracy charges Harmon got hit with, but operating an unlicensed money transmitter could still be on the table. We can't know for sure until the US government makes their next move.
October 27, 2020, 01:20:51 PM
The weird part of these companies that will get caught will be the way they are not as anon as they think they are, your trace could be as cold as it could potentially be but you are a person and you know other people, one word and you will be on hook for watching by FBI or any other organization.
So, "mixers" could be safe for the user for a while, maybe not even that, but the owner is still one person and they could get caught very easily. Even silkroad was disbanded and they did basically everything right but with one or two mistakes and you could be at the end of the world and they will find you. So, I would say just because you think you have the tech behind all of this to save yourself, you should not do anything illegal anyway, they are illegal for a reason.
So, "mixers" could be safe for the user for a while, maybe not even that, but the owner is still one person and they could get caught very easily. Even silkroad was disbanded and they did basically everything right but with one or two mistakes and you could be at the end of the world and they will find you. So, I would say just because you think you have the tech behind all of this to save yourself, you should not do anything illegal anyway, they are illegal for a reason.
October 27, 2020, 10:43:31 AM
The thing about Harmon's Helix mixer is he introduced it as some form of anonymizing payments for criminals to take advantage to which make his service in itself as a form or accessory for the crime being committed, this thing alone will just make them guilty of a crime. For normal mixers who just promotes their mixing service as a way to protect your privacy is something that won't alarm anyone, yes it still might be used by some criminals but it doesn't raise any flags as they aren't really directly connected to any kind of crime. So mixers as a whole might not be affected here.
October 27, 2020, 10:03:25 AM
Quote
Not many may be aware that proxies, vpns and tor nodes are often run by businesses with connections to intelligence agencies like the FBI, NSA, CIA. Its an industry standard for virtually anything IT related.
This is true.However,the darkweb still exists...
I wonder why FBI,NSA,CIA didn't simply destroy the darkweb,since they control most of the Tor Nodes,proxies and they can request personal data from the VPN providers?Maybe spying the darkweb is better than destroying it?
Indeed it is better that way
If they destroyed the Darkweb in its entirety (let's assume they can, which is not set in stone), something more resilient and resistant would inevitably pop up in its place instead (like Monero instead of Bitcoin). There's some point of maximum effect, and it certainly lies somewhere between full control, when no criminals are any longer using this network, and complete elimination, when they start to use something else, with the outcome being essentially the same. Simply put, it is a matter of proper balance and choosing the lesser of two evils
October 27, 2020, 09:11:26 AM
People can still launder money by using mixers. We can't control them but maybe government agencies can trace or track. It would be a waste if someone wants to send crypto privately even if it is a small amount since they wanted a privacy in sending crypto and money laundering people use such mixer to launder money. That is a disadvantage for mixers.
October 27, 2020, 05:25:19 AM
I think they've got their wording wrong.
It should read - Man penalised for violating anti money laundering laws via mixing.
He explicitly set it up solely to aid the movement of drug money. That's nothing like a bog standard mixer being descended on out of nowhere for handling one random reprobate's funds.
It should read - Man penalised for violating anti money laundering laws via mixing.
He explicitly set it up solely to aid the movement of drug money. That's nothing like a bog standard mixer being descended on out of nowhere for handling one random reprobate's funds.
October 27, 2020, 05:16:47 AM
Well, this is part of reasons transactions should be recorded on decentralized/shared ledgers that should remain unchanged/immutable.
I'd suggest that before a coin mixing service mixed coin for people, it should try to make sure that its customers have something that can identify them, and such identifiers or personal/private identifications have to be controlled by their owners/customers and also distributed on a shared decentralized network/system, in a thoroughly encrypted/cryptic and immutable form. The activities generated after mixing coins for customers could then be linked to the customers' encrypted personal identities. If a serious crime or violation is committed with the mixed coins (output), it can be tagged and investigated by law enforcement people. The tagged coins could be destroyed once its owner have been found guilty of the crime, his/her encrypted identity decrypted/de-anonymized.... then virgin/new coin generated as replacement for the tainted one. If the coin has been negatively tagged but now controlled by innocent new owner, the tag could aswell be removed from the coins once the former owner who committed the crime have been justly convicted.
I prefer the burning/destroying of coins that have been tainted by people who have been convicted after committing serious crimes with them. You burn the coins and another are immediately created as replacement!
I'd suggest that before a coin mixing service mixed coin for people, it should try to make sure that its customers have something that can identify them, and such identifiers or personal/private identifications have to be controlled by their owners/customers and also distributed on a shared decentralized network/system, in a thoroughly encrypted/cryptic and immutable form. The activities generated after mixing coins for customers could then be linked to the customers' encrypted personal identities. If a serious crime or violation is committed with the mixed coins (output), it can be tagged and investigated by law enforcement people. The tagged coins could be destroyed once its owner have been found guilty of the crime, his/her encrypted identity decrypted/de-anonymized.... then virgin/new coin generated as replacement for the tainted one. If the coin has been negatively tagged but now controlled by innocent new owner, the tag could aswell be removed from the coins once the former owner who committed the crime have been justly convicted.
I prefer the burning/destroying of coins that have been tainted by people who have been convicted after committing serious crimes with them. You burn the coins and another are immediately created as replacement!
October 27, 2020, 02:45:03 AM
The biggest concern now is the collection of personal details with regards to who uses their service. That could definitely affect the current mixers running unless they have their own personal identities safe away from any law. I'm not sure how he would get out of this one, though.
It can be compared to gambling, like the licenses of the famous online companies are based and legalized in another country. Since it's online, there is still access. That's what could happen to mixers.
It can be compared to gambling, like the licenses of the famous online companies are based and legalized in another country. Since it's online, there is still access. That's what could happen to mixers.
October 27, 2020, 01:39:08 AM
Quote
Not many may be aware that proxies, vpns and tor nodes are often run by businesses with connections to intelligence agencies like the FBI, NSA, CIA. Its an industry standard for virtually anything IT related.
This is true.However,the darkweb still exists...
I wonder why FBI,NSA,CIA didn't simply destroy the darkweb,since they control most of the Tor Nodes,proxies and they can request personal data from the VPN providers?Maybe spying the darkweb is better than destroying it?
Quote
We may witness a transition period where bitcoin mixers gradually adopt KYC checks and engage in other practices to be more compliant with BSA.
Another point is, there could be bitcoin mixers running in countries which do not extradite, or conform to united states court rulings. These type of FINCEN rulings could hold no weight there. Rogue states like north korea could run as many bitcoin mixers as they desired and the USA probably couldn't do anything about it.
Another point is, there could be bitcoin mixers running in countries which do not extradite, or conform to united states court rulings. These type of FINCEN rulings could hold no weight there. Rogue states like north korea could run as many bitcoin mixers as they desired and the USA probably couldn't do anything about it.
I agree.Having a BTC mixer located on offshore servers is the safest bet.On the other hand,there's still a way around this.The USA authorities might require all the US internet service providers to block access to websites,which are located on offshore servers.
October 25, 2020, 03:39:31 AM
I guess it's inevitable. The authority really can't rule out the possibility of money laundering in mixers. I think the first mistake he made is that he wasn't able to hide his identity or his location. I mean, he's unregistered and his service is suspicious, it's not too long until they sniff him out.
This news might serve as a warning to mixer operators.
This news might serve as a warning to mixer operators.
October 24, 2020, 08:03:21 PM
We may witness a transition period where bitcoin mixers gradually adopt KYC checks and engage in other practices to be more compliant with BSA.
I doubt that. KYC would completely negate the purpose of using a mixer in the first place.
Another point is, there could be bitcoin mixers running in countries which do not extradite, or conform to united states court rulings. These type of FINCEN rulings could hold no weight there.
Exactly. This isn't the same situation as Bitcoin exchanges, who have serious risk exposure due to bank accounts. A competent mixer should be run from multiple non-extradition countries who generally don't cooperate with the US government (aka the world police). In the worst case scenario where clearnet domain and servers are seized, the service can be re-seeded within a matter of days.
I was reading the article and thinking about that. Was Coin Ninja operating in the US? If I were the owner of a mixer, I would have it in a tax haven, as many crypto casinos do.
My understanding is he was operating it from Ohio, and remained there long afterwards where he was eventually arrested. Not very smart.
October 24, 2020, 06:49:10 PM
This means any mixer that are operating now are prone to getting penalized and shot down, regardless of what they offer or security they have, people can still use them for money laundering, that is for a simple reason that they don't require a KYC and all transactions are anonymous.
That’s also my thinking since they don’t have KYC and AML already knows that there’s a malicious transactions on-going in cryptomarket especially on Mixers, they are on big risk to face the same faith. It looks like, we really have no choice to remain anonymous, but that’s fine if you’re just a simple crypto users. Scammers, hackers, and money that is being used for terrorism is already happening on crypto space, AML is working for this one closely. I hope that those Mixers who are still in operation will come up into a solution for this one so they won’t ended up like this. 
October 24, 2020, 06:42:28 PM
This means any mixer that are operating now are prone to getting penalized and shot down, regardless of what they offer or security they have, people can still use them for money laundering, that is for a simple reason that they don't require a KYC and all transactions are anonymous.
October 24, 2020, 06:29:24 PM
So meaning that there could be second or more bitcoin mixer could be penalized or punish by law because of money laundering?
What can we expect? This is the feature of bitcoin mixer is to only be use the service of mixing bitcoin parts and make it as a whole. If there is money laundering happen then it should not be the service to get punished instead those people who are using the service. So sad that there are really mistakes and misconception regarding services like this and now being accused in money laundering.
What can we expect? This is the feature of bitcoin mixer is to only be use the service of mixing bitcoin parts and make it as a whole. If there is money laundering happen then it should not be the service to get punished instead those people who are using the service. So sad that there are really mistakes and misconception regarding services like this and now being accused in money laundering.
October 24, 2020, 04:59:08 PM
First Bitcoin Mixer Penalized by FinCEN for Violating Anti-Money Laundering Laws
I am not really sure if this was first one. I know many more were taken down, but yes maybe their trial was not finished yet. But in general, any central point of failure will be abused from Government. Mixers are centralised and easily to be taken down. This was known in 2012 or 2013 or whenever first mixers showed up. Only way to achieve anonymity is by permissions decentralised ledger.
October 24, 2020, 03:24:35 PM
The future of other mixer will depend on their ability to hide their servers location (or to make them out of reach for governments that find mixing illegal)
There's another consideration
We don't how many mixers out there are actually honeypots, i.e. run by government agencies to catch criminals, which is virtually anyone using such a service (from a government point of view). Paradoxically, but governments may not be interested in shutting down this activity altogether, at least as long as they can control the best part of it. They can even turn a blind eye to some small-time criminals so as not to expose and betray themselves when going after big fish
October 24, 2020, 03:22:13 PM
Not many may be aware that proxies, vpns and tor nodes are often run by businesses with connections to intelligence agencies like the FBI, NSA, CIA. Its an industry standard for virtually anything IT related.
I think this point is a bit misleading. VPN's are regularly used to connect to a local network within a company and that type are very unlikely to be of interest to the intelligence agencies. Proxies can also be used for both good and bad. However TOR nodes tend to have a slightly different reputation and are not commonly used in general commercial enterprises. Grouping them all up is a bit unfair. In response to the main piece of news: these bitcoin mixers literally have no other purpose than to disguise the source of funds, which is pretty much the definition of money laundering and it was always going to end up badly for them. Kind of glad that law enforcement have finally taken some action, as it has been going on for years.
October 24, 2020, 02:23:43 PM
First Bitcoin Mixer Penalized by FinCEN for Violating Anti-Money Laundering Laws
I am not really sure if this was first one. I know many more were taken down, but yes maybe their trial was not finished yet. But in general, any central point of failure will be abused from Government. Mixers are centralised and easily to be taken down. This was known in 2012 or 2013 or whenever first mixers showed up. Only way to achieve anonymity is by permissions decentralised ledger.
October 24, 2020, 11:54:24 AM
Quote
From June 2014 through December 2017, Helix conducted over 1,225,000 transactions for its customers and was associated with virtual currency wallet addresses that sent or received over $311 million dollars.
How are they even able to measure that in USD? Between 2014 and 2017 the price of Bitcoin was jumping between as low as $100 and $20000 so it was 311 million when? In 2017? If so it was only 100 million in 2020... Also, if he was mixing cryptocurrency without even touching USD how can they call it money transmitting? Is RPG gold also money? It's classic abuse of power on their side if you ask me.
October 24, 2020, 11:10:00 AM
Anyone remembers Bitmixer.io?
The largest Bitcoin mixer is about to stop working, link to thread: https://bitcointalksearch.org/topic/the-lagest-bitcoin-mixer-is-about-to-stop-working-2042470!
Very interesting thread for reading, and BITMIXER.IO (I don't remember was he the owner or just some moderator) said something interesting about this mixing! I agree with his words, bitcoin is a transparent system and its future is not in illegal activities (and mixing coins is in the gray area, in my humble opinion). The future of other mixer will depend on their ability to hide their servers location (or to make them out of reach for governments that find mixing illegal).
The largest Bitcoin mixer is about to stop working, link to thread: https://bitcointalksearch.org/topic/the-lagest-bitcoin-mixer-is-about-to-stop-working-2042470!
Very interesting thread for reading, and BITMIXER.IO (I don't remember was he the owner or just some moderator) said something interesting about this mixing! I agree with his words, bitcoin is a transparent system and its future is not in illegal activities (and mixing coins is in the gray area, in my humble opinion). The future of other mixer will depend on their ability to hide their servers location (or to make them out of reach for governments that find mixing illegal).
October 24, 2020, 10:59:51 AM
This was supposed to happen since bitcoin mixers are frowned upon by governments and at the same time mixers can be used by anyone as long as they are willing to pay the fee.
I do think that for safety purposes instead of imposing a fine on them , the mixers should be allowed to keep a list of addresses which can only be given to the police in case of absolute emergency. Because sooner or later , the government will for sure come for the mixers, they have to adapt and at the same time they have to take it in that they are being used for illegal activities and such.
So I believe we can reach a common ground , this wouldn't mean we are compromising privacy as long as the mixers keeps it strictly personal ... I do believe this would be needed for sure.
See this one wasn't the fault of the government since they did break the law ... Mixers needs to be extra careful.
I do think that for safety purposes instead of imposing a fine on them , the mixers should be allowed to keep a list of addresses which can only be given to the police in case of absolute emergency. Because sooner or later , the government will for sure come for the mixers, they have to adapt and at the same time they have to take it in that they are being used for illegal activities and such.
So I believe we can reach a common ground , this wouldn't mean we are compromising privacy as long as the mixers keeps it strictly personal ... I do believe this would be needed for sure.
See this one wasn't the fault of the government since they did break the law ... Mixers needs to be extra careful.
Mixers main purpose was for privacy protection, Mixer operator will kill there own business if they give there customer records on police once authority asks it. The reason why people keeps using mixer is because there's no string attached from the website once you used it. Meaning to say that the privacy of the user is always protected and this is the sole purpose of mixer.
The only way to avoid this kind of aggressive moves of the government is to prohibit all users that came from a certain country that has a strict law about this issue. Just my two cents.
October 24, 2020, 10:41:14 AM
This was supposed to happen since bitcoin mixers are frowned upon by governments and at the same time mixers can be used by anyone as long as they are willing to pay the fee.
I do think that for safety purposes instead of imposing a fine on them , the mixers should be allowed to keep a list of addresses which can only be given to the police in case of absolute emergency. Because sooner or later , the government will for sure come for the mixers, they have to adapt and at the same time they have to take it in that they are being used for illegal activities and such.
So I believe we can reach a common ground , this wouldn't mean we are compromising privacy as long as the mixers keeps it strictly personal ... I do believe this would be needed for sure.
See this one wasn't the fault of the government since they did break the law ... Mixers needs to be extra careful.
I do think that for safety purposes instead of imposing a fine on them , the mixers should be allowed to keep a list of addresses which can only be given to the police in case of absolute emergency. Because sooner or later , the government will for sure come for the mixers, they have to adapt and at the same time they have to take it in that they are being used for illegal activities and such.
So I believe we can reach a common ground , this wouldn't mean we are compromising privacy as long as the mixers keeps it strictly personal ... I do believe this would be needed for sure.
See this one wasn't the fault of the government since they did break the law ... Mixers needs to be extra careful.
October 24, 2020, 08:32:10 AM
Lol mixers are apparently money transmitters now:
I'm not sure about Helix, but Coin Ninja definitely is:
https://www.crunchbase.com/organization/coin-ninja
I'm not even sure if Coin Ninja itself is a mixer or offers mixing services; the press release only explicitly stated that Helix was.
I was reading the article and thinking about that. Was Coin Ninja operating in the US? If I were the owner of a mixer, I would have it in a tax haven, as many crypto casinos do.
I'm not sure about Helix, but Coin Ninja definitely is:
https://www.crunchbase.com/organization/coin-ninja
I'm not even sure if Coin Ninja itself is a mixer or offers mixing services; the press release only explicitly stated that Helix was.
October 24, 2020, 08:30:20 AM
Another point is, there could be bitcoin mixers running in countries which do not extradite, or conform to united states court rulings. These type of FINCEN rulings could hold no weight there. Rogue states like north korea could run as many bitcoin mixers as they desired and the USA probably couldn't do anything about it.
I was reading the article and thinking about that. Was Coin Ninja operating in the US? If I were the owner of a mixer, I would have it in a tax haven, as many crypto casinos do.
I don't understand that running a business like that, he didn't get good advice about the laws and what to do.
October 24, 2020, 06:38:21 AM
Quote
WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) has assessed a $60 million civil money penalty against Larry Dean Harmon, the founder, administrator, and primary operator of Helix and Coin Ninja, convertible virtual currency “mixers,” or “tumblers,” for violations of the Bank Secrecy Act (BSA) and its implementing regulations.
Mr. Harmon operated Helix as an unregistered money services business (MSB) from 2014 to 2017 and Coin Ninja from 2017 to 2020. Mr. Harmon is currently being prosecuted in the U.S. District Court for the District of Columbia on charges of conspiracy to launder monetary instruments and the operation of an unlicensed money transmitting business in connection with his operation of Helix.
As FinCEN clarified in its 2013 Guidance, exchangers and administrators of convertible virtual currency are money transmitters under the BSA. As such, they have an obligation to register with FinCEN; to develop, implement, and maintain an anti-money laundering compliance program; and to meet all applicable reporting and recordkeeping requirements. FinCEN issued further clarification in 2019 that financial institutions that are mixers and tumblers of convertible virtual currency must also meet these same requirements.
Mr. Harmon, doing business as Helix and Coin Ninja, operated as an exchanger of convertible virtual currencies by accepting and transmitting bitcoin through a variety of means. From June 2014 through December 2017, Helix conducted over 1,225,000 transactions for its customers and was associated with virtual currency wallet addresses that sent or received over $311 million dollars. 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.
FinCEN’s investigation revealed that Mr. Harmon willfully violated the BSA’s registration, program, and reporting requirements by failing to register as a MSB, failing to implement and maintain an effective anti-money laundering program, and failing to report suspicious activities.
Specifically, the investigation demonstrated that Mr. Harmon deliberately disregarded his obligations under the BSA and implemented practices that allowed Helix to circumvent the BSA’s requirements. This included a failure to collect and verify customer names, addresses, and other identifiers on over 1.2 million transactions. Harmon, operating through Helix, actively deleted even the minimal customer information he did collect. The investigation revealed that Mr. Harmon engaged in transactions with narcotics traffickers, counterfeiters and fraudsters, as well as other criminals.
FinCEN closely coordinated today’s action with the U.S. Department of Justice’s Computer Crimes and Intellectual Property Section, the U.S. Attorney’s Office for the District of Columbia, the Federal Bureau of Investigation, and the Internal Revenue Service Criminal Investigation division.
https://www.fincen.gov/news/news-releases/first-bitcoin-mixer-penalized-fincen-violating-anti-money-laundering-laws
Mr. Harmon operated Helix as an unregistered money services business (MSB) from 2014 to 2017 and Coin Ninja from 2017 to 2020. Mr. Harmon is currently being prosecuted in the U.S. District Court for the District of Columbia on charges of conspiracy to launder monetary instruments and the operation of an unlicensed money transmitting business in connection with his operation of Helix.
As FinCEN clarified in its 2013 Guidance, exchangers and administrators of convertible virtual currency are money transmitters under the BSA. As such, they have an obligation to register with FinCEN; to develop, implement, and maintain an anti-money laundering compliance program; and to meet all applicable reporting and recordkeeping requirements. FinCEN issued further clarification in 2019 that financial institutions that are mixers and tumblers of convertible virtual currency must also meet these same requirements.
Mr. Harmon, doing business as Helix and Coin Ninja, operated as an exchanger of convertible virtual currencies by accepting and transmitting bitcoin through a variety of means. From June 2014 through December 2017, Helix conducted over 1,225,000 transactions for its customers and was associated with virtual currency wallet addresses that sent or received over $311 million dollars. 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.
FinCEN’s investigation revealed that Mr. Harmon willfully violated the BSA’s registration, program, and reporting requirements by failing to register as a MSB, failing to implement and maintain an effective anti-money laundering program, and failing to report suspicious activities.
Specifically, the investigation demonstrated that Mr. Harmon deliberately disregarded his obligations under the BSA and implemented practices that allowed Helix to circumvent the BSA’s requirements. This included a failure to collect and verify customer names, addresses, and other identifiers on over 1.2 million transactions. Harmon, operating through Helix, actively deleted even the minimal customer information he did collect. The investigation revealed that Mr. Harmon engaged in transactions with narcotics traffickers, counterfeiters and fraudsters, as well as other criminals.
FinCEN closely coordinated today’s action with the U.S. Department of Justice’s Computer Crimes and Intellectual Property Section, the U.S. Attorney’s Office for the District of Columbia, the Federal Bureau of Investigation, and the Internal Revenue Service Criminal Investigation division.
https://www.fincen.gov/news/news-releases/first-bitcoin-mixer-penalized-fincen-violating-anti-money-laundering-laws
....
The following could be relevent aspects to the charges and investigation.
Quote
- Specifically, the investigation demonstrated that Mr. Harmon deliberately disregarded his obligations under the BSA and implemented practices that allowed Helix to circumvent the BSA’s requirements. This included a failure to collect and verify customer names, addresses, and other identifiers on over 1.2 million transactions
- 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
Not many may be aware that proxies, vpns and tor nodes are often run by businesses with connections to intelligence agencies like the FBI, NSA, CIA. Its an industry standard for virtually anything IT related.
We may witness a transition period where bitcoin mixers gradually adopt KYC checks and engage in other practices to be more compliant with BSA.
Another point is, there could be bitcoin mixers running in countries which do not extradite, or conform to united states court rulings. These type of FINCEN rulings could hold no weight there. Rogue states like north korea could run as many bitcoin mixers as they desired and the USA probably couldn't do anything about it.
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