A man revealed to be the owner of Bitcoin media site Coin Ninja, has been arrested for money laundering, and the sale of illegal guns for cryptocurrency on the dark web. According to court records, the Akron man was secretly indicted by a federal grand jury in Washington in December 2019, for operating an unlicensed money transmitting business and transmitting money without a FinCEN license and conspiracy to launder monetary instruments.
The indictment was unsealed after Larry Harmon, the CEO of Coin Ninja was arrested on February 6, 2020. According to the indictment, Harmon’s Bitcoin media site Coin Ninja, which seeks to accelerate the global use of the digital coin as a currency, is not tied up in the legal issues against the Akron native. Subsequent court documents filed in Cleveland by prosecutors revealed that, two other defunct businesses, Grams and Helix, which he ran on the dark web. Harmon is also the creator of the online cryptocurrency wallet provider, DropBit.
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Harmon, according to an arrest warrant, allegedly laundered over $311million worth of Bitcoin (354,468 BTC) in transactions at that time. He also provided a dark web privacy tool named Helix, as well as Grams, a search engine known popularly as the “Google of the dark web,” which allowed users to make illegal transactions o the now-defunct dark web marketplace, AlphaBay which was shut down in 2017, Nucleus and AlphaNet. Helix also doubled as a bitcoin money-laundering site on the dark web and allowed its users to “mix” their digital currencies through something called a CoinJoin transaction. Users were able to send any amount of bitcoin, anonymously to any destination at a fee. Mixing of coins, according to law enforcement is associated with money laundering and other illegal activities.
“The defendant advertised Helix to customers on the dark web as a means to hide cryptocurrency transactions from law enforcement,” prosecutors stated in court records. The CEO of Coin Ninja reportedly charged a $2.5 fee on every cryptocurrency transaction which according to prosecutors, earned him about 8,900 bitcoin equivalent to almost $80 million today. Harmon reportedly closed Helix and Grams after federal agents and the Department of Justice shut down AlphaBay market on the dark web.
He announced his intentions to close the platforms in a Reddit thread using his handle, “GramsAdmin.” In a post on Reddit, he stated that he was going to close down Grams and all its services a day after AlphaBay market was shut down by authorities. He added that he tried his possible best to provide the best services on the dark web to his customers but it was getting difficult with law enforcement breathing down his neck. “To get the listings from the markets and to keep up on even routine maintenance of the site have become extremely difficult. I have had a horrible year personally and financially”, he stated.
Harmon also gave all users on the platform a week to withdraw their funds from their accounts “This provides enough time for any late transactions to go through before the shutdown”, he stated. He also added that Helix was going to be disabled a day after the shutdown of AlphaBay.
Brian A. Benczkowski, the Assistant Attorney General Department of Justice’s Criminal speaking after the arrest stated that Helix helped many criminals launder over millions of dollars of illegal drug proceeds as well as other criminal profits for dark web crimes all over the world. He added that the indictment highlights the fact that, trying to conceal digital currency transactions in a way that Harmon and his dark web customers did was a crime and the Department of Justice can and will see to it that such crimes are followed with the necessary penalties.
Federal prosecutors in the state of Ohio requested a federal Judge to keep Harmon in custody until the next hearing as they claimed he was a jet-set multimillionaire, a huge flight risk due to his dark web exploits and can also afford to access any destination across the globe. A federal judge on February 12, 2020, granted the request of prosecutors to hold the Akron man and was remanded to federal custody in Washington D.C, as prosecutors stated that, he is “subject to a lengthy period of incarceration if convicted of the charges.” His Houston based Lawyer was however not available for any comment.
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Gary Harmon, the brother of the accused reportedly told reporters that, all assets belonging to his brother’s bitcoin media site Coin Ninja have been frozen by the federal Bureau of Investigations (FBI). He added that officers of the FBI took out $4,000 worth of Bitcoin from DropBit’s lightening Network node.
Gary Harmon also noted that his brother was allegedly denied a release on bail because he was deemed a flight risk and a millionaire even though the FBI has frozen and confiscated all his assets and money. He claimed that federal prosecutors somehow influenced the decision of the state attorney to detain his brother even though he has no financial means to pull off what they think he will do, thus fleeing the country and reasonably not appearing in court on the scheduled date, due to his strong family ties outside the United States. Gary however didn’t confirm nor deny the accusations against his brother but cited that, this isn’t what a fair treatment feels like.
DropBit allows its users to send and receive digital currencies on-chain over its lightening Network via phone numbers and Twitter handles. This option has made it popular among the bitcoin community since it was launched. Gary also told reporters that, he and the developers behind the platform are funding the wallet’s operations with their money since the FBI froze all funds of DropBit. Court records revealed that the Akron man if convicted could face up to 30 years in prison.
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