Thread by @propelforward

Many have expressed their concerns that the #harmon #helix indictment
(justice.gov/opa/press-rele…) suggests that #mixing or #tumbling is now considered illegal. I think this conclusion is overstated and not supported by the indictment at issue Let’s dive in. /1

The indictment itself (justice.gov/opa/press-rele…) alleges 3 charges- Conspiracy money laundering, Operating unlicensed money transmission business, and Money transmission without a license. /2

The last 2 charges are statutory violations for failing to register his business as a money transmitter under federal and DC district law. We’ve known since Director Blanco’s comments in August 2018 at Block(Legal)Tech that #FinCEN's policy considered businesses that anonymize /3

#crypto transactions, i.e. mixers and tumblers, are money transmitters and thus have to register and have to comply with BSA /OFAC obligations, Failure to register/obtain license/comply = counts 2 and 3. This is not news. /4

The first count, conspiracy money laundering, alleges that the tumbler service from which Mr. Harmon allegedly profited was used to launder proceeds of #Alphabay/other darkweb markets. Its alleged that Harmon marketed the use of his tumbler service to users of the dark web /5

to “erase any trace” of their coins coming from the dark web. This seems to be a pretty straight & clear allegation- tumbler marketed it would clean the source of funds taken off dark web, for a fee. This would violate the Federal law barring a money transmitting businesses /6

from transmitting funds that were known to be derived from a criminal offense/intended to be used to promote unlawful activity. (Govt alleges that the DC requires tumblers/mixers to obtain a license from a DC regulator. DC is governed by federal law- FinCEN interp would apply) /7

The allegations of Ct. 1 allege that Harmon conspired to launder money with persons including the admin of Alphabay, with the intent of concealing that the funds originated from “darknet drug sales and other illegal activity.” Classic money laundering allegations.

Nothing in the indictment says mixing or tumbling alone is improper or illegal. The indictment alleges that Harmon engaged in a money laundering conspiracy to clean dark web derived funds & that he operated an unlicensed, unregistered money transmission business.

The indictment reflects the FinCEN policy announced in 2018 and found in the 2019 guidance- if you operate a business or benefit from tumbling/mixing, you're a money transmitter under federal law and you have to register/get licenses, and comply with reporting obligations.