The Financial Crimes Enforcement Network (FinCEN) fined the founder of cryptocurrency “mixers” Helix and Coin Ninja this week for violations of the Bank Secrecy Act, an action that may signal more serious enforcement actions against bitcoin scams in the future.
Larry Dean Harmon was fined $60 million for operating as an unregistered money services business, since he was deliberately operating as an exchange without first registering with FinCEN.
Although bitcoin is designed to be anonymous, it’s sometimes possible (using tools like Bitcoin Who’s Who) to track transactions until they result in a “withdrawal” via a crypto exchange. Since the exchange has the account holder’s personal information, they can be forced to reveal it if there’s a crime involved.
Bitcoin mixers or tumblers are used to obscure the trail of transactions to make it more difficult to track them to the endpoint. Although mixers are used for various non-criminal purposes, many scammers will utilize them in order to better hide their identities.
The $60M civil fine against Mr. Harmon is in addition to the ongoing criminal money laundering charges against him. While these actions by FinCEN are laudable, neither Helix nor Coin Ninja was among the most popular mixers being used today, so the actual impact on the number of bitcoin scams is likely to be quite limited.