GRAMS – dark web search engine admin indicted for laundering $311 million in bitcoin for darknet transactions – A Ohio is charged in federal court with running a darknet operation that prosecutors said laundered more than $300 million worth of cryptocurrency often used for illegal transactions in underground marketplaces.
Larry Dean Harmon faces several charges detailed in an indictment handed up by a grand jury in Washington, D.C. Federal prosecutors say Harmon, 36, ran a service that allowed customers to send bitcoin and obscure its origin. Such services are known as “mixing” or “tumbling.”
Federal prosecutors say Harmon’s operation, called Helix, partnered with the online underground marketplace AlphaBay to provide money laundering for customers who accessed the marketplace through the darknet, which is not accessible through internet browsers used by most of the public.
AlphaBay was known as a place where customers went to buy drugs, fraudulent ID documents and other illegal items. Federal authorities shut it down in 2017 and said drugs bought on what was then the largest darknet marketplace were tied to overdose deaths.
Helix exchanged at least 354,468 bitcoins, the equivalent of about $311 million at the time of the transactions, the indictment states. In addition to AlphaBay, the service was used in connection with the marketplaces Agora Market, Nucleus and Dream Market.
The grand jury indicted Harmon in December, and his case was unsealed in federal court in Akron on Feb. 6, the same day IRS and FBI agents arrested him and searched his home and office properties in the Akron area. The same day, authorities in Belize searched a vacation property that Harmon leased, according to a court filing by Assistant U.S. Attorneys Daniel Riedl and Christopher Brown.
Harmon, who owns the businesses Coin Ninja and Harmon Web Innovations, is charged with conspiracy to launder money instruments, operating an unlicensed money transmitting business and money transmission without a license.
Federal prosecutors are seeking millions of dollars in financial penalties and want Harmon to forfeit his house on Yellow Creek Road, as well as additional property in Akron and Aurora, Colorado. Harmon has “massive” cryptocurrency assets, Riedl’s and Browns’ filing says. They cite a spreadsheet agents found that they say lists cryptocurrency and U.S. dollar assets totaling nearly $57 million and wrote that he may have other holdings the government hasn’t yet identified.
U.S. Magistrate Judge Kathleen Burke in Akron on Tuesday ordered that Harmon remain in the custody of the U.S. Marshals Service and sent to Washington, D.C. for prosecution. She wrote in an order that the case against him appears strong, that he faces a long prison sentence if convicted and that he has ties outside the country.
Harmon’s attorney did not immediately return a phone call.
In addition to Helix, Harmon owned a darknet search engine called Grams. His two operations were affiliated and some referred to them as “Grams-Helix,” the indictment says.
Prosecutors said in court records that they found a photograph in Harmon’s email account that showed a laptop with browser tabs open for Helix and an administrator page for Grams. Authorities also recovered evidence during the search of his unit at the Grand Caribe resort in Belize that tied him to Gram and Helix, including external hard drives and tools used with cryptocurrency, Riedl and Brown wrote.
Harmon advertised Helix as a way to hide transactions from law enforcement, writing in August 2014 that “there is no way LE would able to tell which addresses are helix addresses,” according to prosecutors.
Helix partnered with AlphaBay in November 2016. AlphaBay operators recommended that customers use a bitcoin tumbling service and provided a link for Grams-Helix’s website, the indictment states.
An FBI agent transferred 0.16 bitcoin from an AlphaBay bitcoin wallet to Helix on Nov. 8, 2016. Helix exchanged it for an equivalent amount, less a 2.5 percent fee, according to the indictment.
Riedl and Brown wrote in their filing that Harmon was aware of the potential threat of law enforcement. He posted in one comment that he didn’t want any “UC,” or undercover agent, working for him and asked “Can you guys think of any ways I could make him prove he wasn’t a UC?”
Harmon started shutting down Grams and Helix in December 2017, prosecutors say.
The Justice Department said Canadian citizen Alexandre Cazes, known online as “Alpha02” and “Admin,” was AlphaBay’s creator and administrator. He killed himself while in custody in Thailand in July 2017, according to a news release.