A court case is underway in the United States that could become a watermark decision for Bitcoin transaction privacy and compliance law.
Larry Harmon of Ohio — who, incidentally, owns the Coin Ninja media site — was recently charged and arrested for money laundering some 350,000 bitcoin (roughly $300 million at the time of the indictment) through his custodial mixing service, Helix. Harmon’s service catered to dark web market participants, particularly sellers, and he associated this service with Grams, his dark web search engine. Authorities may have sniffed Harmon out following the forced closure of AlphaBay in July 2017. At the time, AlphaBay was one of the most popular black markets on the web and the source of Harmon’s business.
“The sole purpose of Harmon’s operation was to conceal criminal transactions from law enforcement on the Darknet, and because of our growing expertise in this area, he could not make good on that promise,” Don Fort, the chief of the IRS Criminal Investigation unit, said in a press release. “Working in tandem with other sites, he sought to be the ‘go-to’ money launderer on the Darknet, but our investigators once again played the role of criminal disrupters, unraveling the interlinked web from one tentacle to another.”
Mix at Your Own Risk
Harmon’s legal defense is staking the claim that this case, ultimately, is an affront to online privacy. At its core, this case is about bitcoin’s fungibility — or whether or not each coin is indistinguishable from another. Bitcoin’s lack of fungibility from a technical perspective is a bedrock of the ongoing privacy debate surrounding the cryptocurrency.
For Harmon’s case, the issue of legal fungibility is coming to the fore.
“The District Judge (after a pretty substantial fight) overruled the Magistrate Judge and granted Larry release on bond
