Larry Harmon, CEO of Coin Ninja, was arrested earlier this week for allegedly laundering more than $300 million in cryptocurrency on the darknet market AlphaBay. Harmon’s family denied the allegations, claiming Larry had nothing to do with AlphaBay.
Apart from Coin Ninja, Harmon also designed the bitcoin mixer Helix, a privacy tool that conducts transactions in mixed batches, making individual transactions harder to track. Department of Justice has released an indictment, describing Helix as a “money transmitting and money laundering business.”
“Helix enabled customers, for a fee, to send bitcoins to designated recipients in a manner which was designed to conceal and obfuscate the source or owner of the bitcoins,” says the indictment. “This type of service is commonly referred to as a bitcoin ‘mixer’ or ‘tumbler.’”
Harmon may face 30 years in prison for committing these crimes.
Peter McCormack, Journalist at Defiance & What Bitcoin Did, reportedly contacted Harmon’s brother, Gary Harmon, who claims that Coin Ninja’s funds have been frozen and that the FBI has taken $4,000 in Bitcoin from its Lightning Network.
McCormack said that the court has decided to deny Harmon release on bail because he was considered a flight risk, despite the fact that all of his assets have been confiscated.
The prosecutor’s decision to arrest Harmon indicates that the state feels that Harmon will not reasonably appear in court if allowed a release on bail, given the fact that he has “significant family ties outside the United States” and is “subject to a lengthy period of incarceration if convicted.”
Bitcoin experts are getting worried over the fact that creating a tool like Helix could be seen as a money-laundering conspiracy and set a precedent.
Bitcoin Core developer Matt Corallo said if the Washington federal court confirms this accusation, it would be “the beginning of the end.”
Larry Harmon’s wife, Margot, denied the allegations, saying her husband did not engage in criminal activities.
“Larry has always been an advocate for privacy. He doesn’t know any bad guys from the dark web. He just wanted to help people have better privacy,” Margot said in an interview with Coindesk. “It’s a basic right we are guaranteed in the constitution.”