FinCEN sets $60 million fine against convertible virtual currency exchanger over BSA violations

A $60 million civil money penalty was assessed against the founder, administrator, and primary operator of Helix and Coin Ninja – convertible virtual currency “mixers” or “tumblers” – by the Financial Crimes Enforcement Network (FinCEN) over alleged violations of the Bank Secrecy Act (BSA) and implementing rules.

FinCEN said that Larry Dean Harmon operated Helix as an unregistered money services business (MSB) from 2014 to 2017 and Coin Ninja from 2017 to 2020. It said 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.

Guidance issued in 2013, FinCEN noted, clarified that exchangers and administrators of convertible virtual currency – defined as currency that either has an equivalent value in real currency, or acts as a substitute for real 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,” it said in a release Monday. It also pointed to a 2019 clarification that states financial institutions that are mixers and tumblers of convertible virtual currency must also meet these same requirements.

The agency said that 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, it said, Helix conducted more than 1.2 million transactions for its customers and was associated with virtual currency wallet addresses that sent or received more than $311 million.

FinCEN said its investigation has identified at least 356,000 bitcoin transactions through Helix. It said 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.” It said that 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,” the agency said.

First Bitcoin “Mixer” Penalized by FinCEN for Violating Anti-Money Laundering Laws

Be the first to comment

Leave a Reply

Your email address will not be published.