(Bloomberg) -- An Ohio man who laundered more than $300 million of Bitcoin on behalf of drug traffickers and other criminals was sentenced to three years in prison, after a judge granted him leniency for helping the US prosecute other cryptocurrency cases.
Larry Harmon pleaded guilty in 2021 after running a “mixing” service on the darknet — websites for illicit goods and services — that jumbled crypto tokens and made it harder to trace transactions. His Helix service helped hundreds of drug dealers “operate for years with greater impunity” and eased the movement of hundreds of millions of dollars in illicit funds, prosecutors wrote in a court filing.
US District Judge Beryl Howell, who imposed a sentence in federal court in Washington on Friday, said Harmon’s “large-scale, long-running” money laundering operation amounted to “incredibly serious conduct.”
But Howell opted against a harsher sentence of more than six years recommended by the government, noting Harmon’s “substantial assistance” to law enforcement and his decision to shut down Helix two years before his arrest. “He turned himself around before he was arrested in this case,” the judge said.
Howell ordered Harmon to forfeit $311 million, representing the value of at least 354,468 Bitcoin at the time he laundered them. He’d earlier been hit with a $60 million civil fine from the US Treasury Department.
In 2014, Harmon set up Grams, a service “with a clean user interface that mimicked Google” to make it easier to find and buy items on darknet markets, the US said. Offerings included hacking tools, stolen credit card information and forged documents, but illegal drugs dominated. Darknet sites usually can be accessed only with specialized software.
Bitcoin Fog
Harmon then set up Helix, seeking to improve on the features of another mixer he used, Bitcoin Fog. This year, Harmon testified at the trial of Bitcoin Fog’s administrator, Roman Sterlingov, who was convicted and sentenced to more than 12 years in prison.
“The scale and the impact of the defendant’s money laundering operation was staggering,” said Alden Pelker, a prosecutor on the case. “He brought search engine optimization to local cocaine distributors,” she said, while acknowledging Harmon’s “exceptional cooperation.”
Harmon faced as long as 20 years behind bars. As recently as Oct. 31, prosecutors sought a sentence of eight years, but they cut that recommendation earlier this week to six years and three months, citing his cooperation in the Bitcoin Fog case, court filings show.
Harmon expressed remorse before his sentencing. “I deeply regret my actions and the harm it caused,” he told the judge. Harmon said he knew he was helping criminals, but he let his “greed take over.”
Prosecutors praised Harmon, saying in a court filing he “took full responsibility for his actions, pleaded guilty, expressed genuine remorse, and cooperated extensively with the government.”
After US agents arrested Harmon in 2020, they made an alarming discovery: 713 digital tokens worth almost $5 million at the time were somehow moved from the “hardware wallet” they were holding in an evidence locker.
They later accused his brother, Gary, of using Larry’s credentials to recreate eight Bitcoin wallets stored on a device in an Internal Revenue Service evidence locker. The loot was among 4,877 digital tokens seized from Larry.
After the Bitcoin vanished from the device held by the IRS, agents found a photo on Gary Harmon’s mobile phone showing him grinning in a tub full of cash at a nightclub. Prosecutors say he used 68 Bitcoin as collateral for a $1.2 million loan and spent some to buy a luxury condo in Cleveland.
Gary Harmon later pleaded guilty and was sentenced by Howell to four years in prison.
The case is US v. Harmon, 19-cr-00395, US District Court, District of Columbia (Washington).
(Updates with comments from judge, defendant.)
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