It may be just another “story” which might pass many by, but something very interesting just happened in a US court as the operator of Helix’ guilty plea gets a judge to summise in law something that most Bitcoin holders already knew, which is that Bitcoin is money.
Larry Dean Harmon, 38, from Akron Ohio admitted to being the operator of Darknet Bitcoin Mixer service Helix, which advertised itself to customers as a way of concealing transactions from law enforcement.
According to the court documents, Helix functioned as a bitcoin “mixer” or “tumbler,” allowing customers, for a fee, to send bitcoin to designated recipients in a manner that was designed to conceal the source or owner of the bitcoin.
Helix partnered with several Darknet markets, including AlphaBay, Evolution, Cloud 9 and others, to provide a money laundering service using Bitcoin, with over 350,000 bitcoin being moved by the service. Harmon also admitted that he conspired with Darknet vendors and marketplaces to launder Bitcoins generated through illicit drug trafficking activities.
Helix was a mixer (sometimes called a tumbler), which is a service that attempts to anonymise Bitcoin transactions by “pooling” funds from several parties to mix them up and spit out supposedly “clean” Bitcoin which could not be directly traced to a specific address. This allows criminals to hide the telltale transaction signatures which are fully auditable and transparent on the Bitcoin network.
But with the operator of Helix’ guilty plea, it’s obvious that this didn’t stop law enforcement from pursuing him and somehow forensically piecing together what evidence they could from on-chain activity to bring the charges, resulting in the conviction.
The Helix guilty plea included the forfeiture of over 4,400 Bitcoin, with a current value of over $200M, along with a number of seized properties, but Larry Dean Harmon also faces sentencing which could see him imprisoned for up to 20 years and/or huge fines. Chief Judge Beryl Howell of the U.S. District Court for the District of Columbia accepted the guilty plea, and is now considering the sentence according to the Justice Department.
“By holding Harmon accountable, the department has disrupted the unlawful money laundering practices of these dangerous criminal enterprises….The Justice Department, together with our law enforcement and regulatory partners, will continue to take enforcement actions to identify and impede those who use illicit means for financial gain, as well as those who use the Darknet to facilitate and obscure their criminal conduct.”Justice Dept. Assistant AG Kenneth A. Polite Jr
Helix guilty plea leads to interesting legal opinions from Judge
The Helix guilty plea came with, of course, some mitigation, and this is where it gets interesting. Larry Dean Harmon’s defence is that Bitcoin is not money, and therefore, he argues, technically it wasn’t money laundering. But Judge Howell rejected this, writing in her summation that “Money commonly means a medium of exchange, method of payment, or store of value. Bitcoin is these things.” This means it’s on the record, at least in the District of Columbia, and the law is aware of this fact.
This could be a game changer in future court cases, as now there is a precedent for its’ status now that a judge has indeed recognised that Bitcoin is money. And in many ways, because of the transparent nature of Bitcoin, it has qualities that make it much better than money when it comes to actual law enforcement. The plea also shows that law enforcement is actively pursuing cryptocurrency mixers and tumblers which are linked to illegal activities, even on the Darknet.
Furthermore, this argument might be used by those applying for Bitcoin ETF‘s, or to argue that Bitcoin is legal tender in settlements, and should be treated in law as money.
Harmon’s Defence Attorney, Charles Flood, made the point that no human intervention was present in the illegal Helix service as the mixer/tumbler service was fully automated. He is quoted as saying that Harmon had set up a “double-blind” system, and that although he was aware that Helix was dealing with laundered drug money, he did not know the exact amount of Bitcoin which passed through the system.
“The guilty plea shows U.S. law enforcement is pursuing cryptocurrency mixers with connections to the Darknet and illicit activities, while the transparency of blockchain enables them to trace the funds. The nature of cryptocurrency is to allow law enforcement to have unique visibility on financial flow where they never had before.”Ari Redbond, Former Assistant US Attourney and senior advisor to the treasury, District of Columbia.
So, the big takeaway is that Bitcoin is money indeed, and that’s something which could be useful in court cases in the future.