Disappearance of crypto: the Harmon case

Larry Harmon, CEO of Coin Ninja and founder of DropBit, was arrested in 2020 on charges of laundering $311 million through BTC.

This arrest, for the purposes of cryptocurrency law enforcement, marked a significant turning point. 

Today, it is Gary Harmon, Larry’s younger brother, who is in the spotlight of the authorities. Indeed, we see him smiling smugly in a hot tub full of cash and surrounded by scantily clad women. 

Cryptocurrencies: the case of the Harmon brothers

The incident, recorded on a cell phone photo, in addition to proving to be part of his downfall, is evidence that Gary had unexpectedly become very wealthy in the eyes of the US authorities and thus guilty of the wrongdoings charged against him. 

Indeed, during the proceedings, the feds alleged that Gary Harmon had remotely stolen Bitcoin stored in a computer device already under government control. This computing device had previously been seized by the government because of its illegal nature.

Although, the affair was still unclear, especially in identifying a culprit. 

Several other reports later supplemented the first one to provide a more informed view of the situation. According to one report, the stolen funds were initially seized by the feds from Gary’s brother Larry Harmon. 

Another report states that about 713 BTC, worth more than $5 million at the time of the theft, were stolen while stored in a Trezor 1 hardware crypto wallet.

Indeed, Larry was accused by prosecutors of remotely accessing and stealing 713 digital tokens. 

The tokens were taken from the “hardware wallet” kept in an evidence locker as officials watched helplessly.

Larry Harmon, at the time, swore he had nothing to do with the disappearing act. However, he has since admitted to laundering $311 million through cryptocurrency transactions. 

In addition, Larry Harmon, 39, blamed Gary Harmon, 30, in order to help authorities in the arrest of his younger brother. 

After several searches, most of the stolen funds were hidden through Bitcoin mixers such as Chipmixer or Wasabi Wallet. Government agents were able to trace about 519 BTC through the mixers.

As for the remaining funds, Harmon deposited them on the BlockFi platform.

So while Larry is out on bail and awaiting trial near Akron, Gary Harmon is being held in federal prison in Washington DC. 

The cases involving the Harmons, also referred to as the crypto brothers, illustrate how the IRS and FBI are successfully gathering evidence, even though they are still having trouble on the blockchain front.

Authorities followed Gary as he went through a maze of anonymous accounts to link digital money to Larry Harmon. However, when they tried to catch him, they ran into a challenge: how do you surround a mercury resource, which Bitcoin is, with a fence?

Cryptocurrency law enforcement 

In terms of crypto law enforcement, Larry Harmon’s arrest in February 2020, as pointed out earlier, was a turning point. 

Indeed, it was the first time someone had been charged with crimes related to “mixing,” a process that makes it significantly more difficult to track transactions combining the tokens of multiple owners and the large sums of money involved.

In addition, Larry Harmon developed the Grams search engine in 2014 to assist users in searching the darknet for weapons, drugs, and illegal hacking services. 

Users could pay using the mixing service run by Larry Harmon, Helix, which paid him 2.5% of each transaction.

Mixing advocates in the cryptocurrency community confirm improved privacy, but Larry Harmon promoted Helix to prevent law enforcement from tracking tainted Bitcoin online under the alias “gramsadmin.” 

Crypto-mixing in the United States.

The situation of crypto-mixing, and cryptocurrency mixing platforms, has a bad reputation not only with US authorities, but also worldwide. 

This is because authorities in most parts of the world regard cryptocurrency mixers as agents facilitating money laundering.

Later this year, US authorities shut down another crypto-mixing platform called Tornado Cash. A case that has caused quite a stir in the cryptocurrency industry, with several players making comments about the decision of the US.

It is a relatively complex issue, as Vitalik Buterin, the co-founder of Ethereum, said that he used Tornado Cash to make donations in Ukraine, allowing the anonymity of those receiving the donations to be maintained.

The case, as can be easily observed, is more delicate and controversial than it seems.