13 Feb 2020 Samantha McLauren
U.S. Authorities Accused Dropbit CEO Of Laundering $311 Million Worth Of Bitcoin
United States federal authorities pressed charges and arrested crypto cold wallet provider DropBit’s CEO Dean Harmon. The charges include conspiracy to launder money and unlicensed money transmission operations on the DarkNet, local news outlet Cleveland.com reports.
Larry Dean Harmon also got his name charged with accusations of providing “mixer” services to obstruct transaction tracing across the Bitcoin network. Prosecutors clarified that Harmon’s operation, dubbed Helix, established cooperation with DarkNet marketplace AlphaBay. Harmon and AlphaBay cooperated in providing money-laundering services.
During the investigation, prosecutors found out Harmon allegedly laundered at least 354,468 Bitcoins, worth an estimate of $311 million between 2014 and 2017, when AlphaBay was shut down by law enforcement authorities. At current price rates, the total amount of Bitcoin Harmon laundered would have reached a market value of over $3,7 billion. Harmon started cooperating with Alphabay in November 2016.
The first indiction against Harmon was in December 2019, while the Washington D.C. grand jury unsealed the case on February 6, 2020. FBI and IRS agents arrested Harmon in Akron, Cleveland. The agents also searched his properties, as well as a property Harmon leased in Belize, after a court filing by U.S. attorneys Christopher Brown and Daniel Riedl.
Harmon would stay in jail, as U.S. Magistrate Judge Kathleen Burke denied his bond proposal. According to the judge, Harmon may “flee the United States, despite confiscating all of his assets.” Judge Burke also commented that Harmon faces “a long prison sentence if found guilty, as well as a strong connection structure outside the United States.”
Prosecutors found Harmon connected to crypto businesses Coin Ninja and Harmon Web Innovations. U.S. authorities also declared that Harmon “has a massive cryptocurrency asset portfolio,” estimated at around $57 million. Also, attorneys Reidl and Brown found out that Harmon may “hold cryptocurrencies in a yet not-specified government.”
Jake Chervinsky, a general council at crypto lending company Compound, described the case against Harmon as Tough, noting that the U.S. Department of Justice may be going “too far with the accusations of unlicensed money transmission.”
The FBI and IRS confiscated multiple hard drives, wallet addresses, and e-mail correspondence, connecting Harmon to the ownership of DarkNet search engine Grams, which complement the Helix operation.
Harmon allegedly advertised Grams and Helix as a secure way to hide information about transactions so that no law enforcement authority could trace the path of transactions. FBI agents even conducted a 0,16 BTC transaction through Helix on November 6.
However, attorneys Christopher Brown and Daniel Riedl mentioned that Harmon was well-aware of the potential law enforcement threat against him. He even asked the Helix community how to prove that the undercover agents were really not undercover. Harmon allegedly shut down operations for both Helix and Grams in 2017, according to prosecutors.
AlphaBay’s owner, the Canadian citizen Alexandre Cazes committed suicide in 2017 while being held in custody in Thailand.
However, Drop Bit would most probably continue its operations, as the funds and services are now in the hands of Dean Harmon’s brother, Greg.
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