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posted by janrinok on Saturday February 15 2020, @12:38AM   Printer-friendly
from the gov'ts-don't-like-bitcoin dept.

US DOJ Calls Bitcoin Mixing 'a Crime' in Arrest of Software Developer - CoinDesk:

Larry Harmon was arrested earlier this week for allegedly participating in a money-laundering conspiracy worth more than $300 million in cryptocurrency involving darknet marketplace AlphaBay. However, the family of the Coin Ninja CEO claims he was never involved with AlphaBay.

Harmon's case raises pressing questions about developer liability in the crypto industry.

In addition to the crypto media site Coin Ninja, Harmon created the bitcoin mixer Helix, which sends transactions out in mixed batches so individual payments are harder to trace. In its indictment, Department of Justice prosecutors refer to Helix as a "money transmitting and money laundering business."

"Helix enabled customers, for a fee, to send bitcoins to designated recipients in a manner which was designed to conceal and obfuscate the source or owner of the bitcoins," the indictment continues. "This type of service is commonly referred to as a bitcoin 'mixer' or 'tumbler.'"

In a statement Thursday, Justice Department Assistant Attorney General Brian Benczkowski made the department's views on bitcoin mixers clear. "This indictment underscores that seeking to obscure virtual currency transactions in this way is a crime," he said.

Harmon's brother and Coin Ninja coworker, Gary Harmon, said Helix did not directly partner with AlphaBay and that the darknet market recommended the mixer without Larry's permission or input. (Helix shut down in 2017; AlphaBay was seized by the FBI in July 2017.)

[...] Many bitcoin experts are concerned this could establish a precedent where simply creating a bitcoin mixer is seen, in itself, as a money-laundering conspiracy.

Bitcoin Core contributor Matt Corallo tweeted that if this accusation was upheld by the federal court in Washington, D.C., it would be "the beginning of the end."

CORRECTION (Feb. 14, 04:00 UTC): This article has been updated to clarify the difference between bitcoin mixers that custody digital assets and ones where users retain custody.

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  • (Score: 0) by Anonymous Coward on Saturday February 15 2020, @07:01PM

    by Anonymous Coward on Saturday February 15 2020, @07:01PM (#958575)

    that piece of shit needs to be ammended or abolished.