Could Privacy Tools for Bitcoin & Cryptocurrencies Get Shut Down?
According to the, Larry Harmon the CEO of Coin Ninja & Harmon Web Innovations has been arrested. Harmon has been charged with conspiracy to launder money and money transmission without a license.
Harmon, Helix & the Darkweb
Harmon is probably best known for his Bitcoin wallet app DropBit which is described on their Twitter as Venmo for Bitcoin. The wallet allowed Bitcoin and lightning network transactions via Twitter handle or phone numbers. DropBit is Coin Ninja's main product.
According to a tweet by popular Bitcoin podcaster, Peter McCormack, DropBit & Coin Ninja are still operational as per now. Despite having their accounts frozen, Hamon's brother Gary is keeping it functional. It seems that Coin Ninja & DropBit are not involved with the money laundering accusation.
We've contacted Larry's wife Margo Hamon and asked if she thinks Larry Arrest will Affect DropBit. She responded to this saying: "I do think Larry's arrest will affect DropBit and Coin Ninja. Nine employees lost their jobs and health insurance, and our assets to keep it going are frozen. But I believe the crypto community will be behind Larry and DropBit because it has brought so many new people into the crypto world. We've all believed in this app from day one and we will do whatever we can to continue his vision until he is able to."
When asked if DropBit will continue operations, she said "We're trying to do whatever we can to keep DropBit alive until Larry is released."
The cause for Harmon's arrest was two separate ventures called Grams & Helix. Grams operated as a darknet search engine while offered Bitcoin mixing services. It allowed users to 'mix' their Bitcoin for a 2.5% fee making the Bitcoins origin virtually untraceable. Both operations were affiliated with each other according to the authorities.
Belizean authorities collaborated with U.S. authorities and conducted a search of Harmon's leased property in Belize.
US Authorities claim that Helix mixed an estimated 354,468 BTC worth an estimated $311 million at the time they were mixed. Helix website boasts a much smaller number of 10,000 BTC mixed near the footer.
The Department of Justice V.S. Larry Harmon
Prosecutors claim that Helix partnered with darknet marketplace AlphaBay in 2016 and provided money laundering services. AlphaBay was a darkweb marketplace like the better-known Silk Road which offered the sale of narcotics and illegal materials. AlphaBay was shut down and its operators were arrested in 2017 after it was linked to drug overdoses. Transactions on other dark web marketplaces were also linked to Helix.
As per the prosecutors, Harmon began shutting down Helix and Grams in 2017, following the closure of AlphaBay. Oddly enough, Helix's website seems to be operational.
Currently the prosecutors are seeking heavy financial penalties which could amount to millions of dollars and for Harmon to forfeit his properties. Harmon could face 14 to 17½ years in prison.
When asked her opinion on Larry's Arrest, Margo said "My opinion of Larry's arrest is this: If the government wants to regulate the use, distribution, tumbling, and ownership of Bitcoin, the proper channel to do that is through the United States congress. Not by seizing all of a man's property in an attempt to make an example of him, and impose a trial judge and jury to decide if a law that doesn't exist yet has been broken. This has been a gross display of the government stepping on the freedoms of its citizens.
There are many bitcoin tumblers up and running today. (CoinJoin, BitcoinLaundry.com, smartmixer.io cryptomixer.io, bitcoinmix.org) What does this mean for them?"
Later when asked if there is a chance that Larry Harmons case will be dismissed, Margo responded with "I certainly think it should be. On Feb 11th, Larry was denied bond on grounds based purely on speculation (agents and witnesses were unable to produce any evidence to the effect) that he may be a flight risk because he might have more Bitcoin lying around, and has "flown in a private jet before Although an ankle monitor would have extinguished any of these concerns and he offered to give them access to the bitcoin hard wallets they had taken, they already had his passports and mine, still- he was denied bond and will be transferred to D.C. later this week to be detained in prison despite his presumption of innocence."
DropBit & the Future of Bitcoin Privacy
Hypothetically this case could set legal precedence regarding cryptocurrency coin mixing & privacy tools depending on the outcome. This is seemingly the first time that the founder of cryptocurrency privacy tools was arrested. Should Harmon be convicted it could have heavy consequences for the world of Bitcoin & cryptocurrencies.
When asked if Larry's case might set precedent, Margo responded by saying: "I don't know. I don't believe in setting precedence this way. First and foremost, this is a man's life we are talking about. A good loving man who was ripped away from his family. Someone who was building an app to help the mass adoption of Bitcoin, and seeing the success of that app taking off. Is this the way the law operates in this country now? Congress is too behind the technology to know how to write a law, so agents storm into peoples' homes and seize what they want, claiming a crime that they can't prove was committed?"
When asked about what type of person Larry Harmon is Margo Harmon said: " Larry is an amazing husband and my favorite person in the world. He is the most generous and loving man I've ever met. He makes me laugh on a daily basis and has inspired me to go after my dreams and goals. He's made me a better woman. Anyone who knows Larry will tell you that he would be the first person to show up and help someone when they are in need. He's done so much for charities, and also goes above and beyond to take care of his family. There is an emptiness here without him."
Some may say that Harmon's case mirrors that of the Silk Road's creator Ross Ulbricht to a certain extent. Both were programmers and Bitcoin enthusiasts that were accused of money laundering, although Ulbricht was convicted of additional crimes. One must keep in mind however that the accusations against Harmon are less severe.
Perhaps we will see a similar community effort to assist Larry Harmon will launch in the future. Some may want to help with legal costs or support his family in their time of crisis.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado