Dropbit Wallet CEO Charged with Money-Laundering
Privacy of crypto transactions has been challenged again, as the CEO of the Dropbit app Larry Harmon has been arrested and charged with conspiracy to launder money.
Dropbit CEO Larry Harmon Faces 30 Years in Prison
Dropbit, the Bitcoin wallet and service, continues to operate for now. But Coin Ninja, Harmon’s cryptocurrency media, had its assets seized. The most contentious issue was the Helix service, which could help Dropbit clients mix their coins.
Peter McCormack, prominent Bitcoin supporter, has noted in a lengthy Twitter thread that Harmon faces serious consequences from attempting to offer private BTC transfers. Reportedly, the usage of Dropbit and Helix have also been related to dark markets.
1/ Re: Dropbit…
…CEO Larry Harmon has been arrested and is currently in Youngstown Ohio federal jail.
– Conspiracy to launder money instruments
– Operating an unlicensed money transmitting business
He faces up to 30 years.
— Peter McCormack (@PeterMcCormack) February 13, 2020
Dropbit aimed to be an app for mainstream adoption, becoming “the Venmo for Bitcoin”. The app also had a referral program to send and receive Satoshis to drive adoption.
However, coin mixing is facing high levels of intolerance, as law enforcement goes after mixer providers. This time, it was US authorities that took notice, making the case directly against Harmon for attempting money-laundering through BTC.
Harmon Facilitated Coin Mixing for Darknet Sites
The other serious accusation against Harmon is the creation of the Gram search engine, which aggregated results from darknet websites. The Helix coin-mixing service was also affiliated with the Gram search engine, attempting to anonymize BTC usage.
In the indictment papers, there is evidence of actively advertising Helix as a tool to mix BTC and exchange them for new coins that were not tainted by darknet usage. The messages and advertisements helped law enforcement make the case against Harmon. Helix has also reportedly offered mixing services to the Alpha Bay darknet site back in 2016.
Mixers have been used for years in the crypto space, with crackdowns only happening in the past couple of years. With stricter money-laundering rules, even blockchain records are not exempt from scrutiny. Most anonymous uses have been discouraged, and exchanges or merchants already require de-anonymization through KYC.
As a result of the Helix activity, Harmon reportedly helped launder 354,468 BTC, equivalent to above 354 million at current prices. But what is even more curious, the BTC that went through Helix were treated as “money”, in a case where Harmon transferred value without owning a money transmitting business license in the District of Columbia.
Do you think Harmon should’ve been arrested? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter @PeterMcCormack