Bitcoin Mixing Service Criminal Cases
1. United States v. Larry Dean Harmon (Helix / Grams case, 2020–2023)
Facts:
Larry Harmon operated a Bitcoin “tumbler” known as Helix from 2014 to 2017. Helix was integrated with the darknet search engine Grams, and allowed users to send Bitcoin through the service and receive new Bitcoin that was difficult to trace. Helix processed over 350,000 BTC (worth hundreds of millions of dollars) and was widely used on darknet markets such as AlphaBay.
Charges:
Conspiracy to launder monetary instruments (18 U.S.C. §1956)
Operating an unlicensed money transmitting business (18 U.S.C. §1960)
Money laundering under the Bank Secrecy Act (BSA)
Court Findings:
Harmon argued that Helix was merely a “privacy tool” and not a money transmitter. However, the court held that because Helix received Bitcoin, mixed it, and transmitted it back for a fee, it was a money transmission service under U.S. law.
The D.C. District Court also rejected Harmon’s claim that Bitcoin was not “money,” confirming that Bitcoin qualifies as money under the statutes.
Outcome:
Harmon pleaded guilty in 2023 and agreed to forfeit over 4,400 BTC (≈$200 million).
He faces a potential 20-year sentence.
Significance:
This was the first major federal conviction affirming that operating a Bitcoin mixer can constitute money laundering and unlicensed money transmission.
It set the tone for future prosecutions and clarified that mixing = concealment of criminal proceeds when tied to darknet activity.
2. United States v. Roman Sterlingov (Bitcoin Fog, 2021–2024)
Facts:
Roman Sterlingov, a dual Swedish–Russian national, was accused of creating and running Bitcoin Fog, one of the oldest Bitcoin mixing services, active from 2011 to 2021. Bitcoin Fog allegedly laundered over $335 million in Bitcoin transactions linked to drug markets and hacking forums.
Charges:
Conspiracy to commit money laundering
Operating an unlicensed money transmitting business
Money laundering involving criminal proceeds
Legal Issues:
Sterlingov claimed he was not the operator and that blockchain analysis was insufficient to prove his involvement.
The court admitted forensic blockchain tracing evidence, showing Bitcoin flows between his accounts and the Bitcoin Fog server wallets.
Outcome:
In 2024, Sterlingov was convicted on all major counts in the U.S. District Court for D.C.
He faces a maximum of 20 years in prison.
Significance:
This case was groundbreaking because it validated blockchain analysis as reliable forensic evidence in federal courts.
It also reaffirmed the principle that concealment of fund origins through mixers equals money laundering, even if the service charges a “privacy fee.”
3. United States v. Gary Harmon (2021)
Facts:
Gary Harmon is the brother of Larry Harmon (Helix operator). After Larry’s arrest, investigators found that Gary accessed Larry’s cryptocurrency wallets and transferred 712 BTC (~$4.8 million) that had been seized by authorities.
Charges:
Money laundering
Obstruction of justice
Theft of government property
Outcome:
Gary Harmon pleaded guilty in 2023 and forfeited the Bitcoin.
Significance:
Though technically separate, this case emphasized how attempts to move or hide cryptocurrency linked to a seized mixer constitute a new, separate crime of obstruction and laundering. It reinforced government control over seized crypto evidence.
4. United States v. Alexey Pertsev (Tornado Cash, 2022–2024, Netherlands)
Facts:
Pertsev, a Russian developer residing in the Netherlands, helped write the open-source code for Tornado Cash, an Ethereum-based decentralized mixer smart contract. Authorities alleged that Tornado Cash laundered more than $1 billion, including funds stolen by North Korea’s Lazarus Group.
Charges (Dutch and EU):
Money laundering (under Dutch financial laws)
Facilitating criminal concealment of illicit proceeds
Legal Issue:
The core issue was whether writing or deploying open-source code that others use to launder money constitutes “participation in money laundering.”
Outcome:
Pertsev was convicted in 2024 by a Dutch court and sentenced to 64 months imprisonment. The court held that he was aware of Tornado Cash being used for criminal purposes and failed to implement controls to prevent it.
Significance:
This was the first conviction involving a decentralized autonomous mixing protocol.
It showed that developers can be held liable if they knowingly facilitate anonymity tools used for crime, even when they do not directly handle funds.
5. United States v. Akeem Esemuede & Others (Bitmixer.io case, 2017–2019)
Facts:
Bitmixer.io was a large Bitcoin tumbler operating between 2014 and 2017, handling over $200 million worth of Bitcoin. The FBI and Europol later traced illicit darknet funds (including Silk Road and AlphaBay proceeds) through Bitmixer wallets.
When Bitmixer abruptly shut down in 2017, the operator’s identity remained hidden, but later investigations identified key collaborators including financial intermediaries who helped launder profits.
Charges:
Money laundering
Operation of unlicensed money transmitting business
Conspiracy to conceal proceeds from drug trafficking and hacking
Outcome:
By 2019, multiple individuals associated with the service were indicted. Plea agreements included forfeiture of cryptocurrency assets.
Significance:
Bitmixer became an early benchmark case establishing that using or providing a mixer to disguise darknet proceeds is equivalent to structuring transactions to conceal origin, a direct form of money laundering.
6. United States v. Roman Semenov (Tornado Cash Co-Founder, 2023)
Facts:
Roman Semenov, a Russian national and co-founder of Tornado Cash, was indicted by the U.S. Department of Justice in 2023.
Authorities alleged Tornado Cash laundered over $1 billion, including funds from the Ronin Bridge hack (by North Korea’s Lazarus Group).
Charges:
Conspiracy to commit money laundering
Conspiracy to violate sanctions (International Emergency Economic Powers Act)
Operating an unlicensed money transmitting business
Legal Issue:
Whether decentralized governance (via DAO) shields founders from liability for money transmission or sanctions violations.
Court Proceedings:
Semenov remains wanted by U.S. authorities. The indictment clarified that decentralization does not exempt responsibility if the founders retain control or financial benefit.
Significance:
The case expanded mixer liability beyond traditional operators to DAO founders and smart contract deployers, showing prosecutors are adapting financial laws to decentralized platforms.
7. United States v. Arthur Budovsky et al. (Liberty Reserve case, 2013)
Facts:
Before Bitcoin mixing existed, Liberty Reserve was a digital currency exchange that allowed anonymous fund transfers. It processed over $8 billion in transactions used for fraud, hacking, and drug markets.
Although not crypto-specific, this case is foundational for how mixers are treated as unlicensed money transmitters.
Charges:
Money laundering
Operating an unlicensed money transmitting business
Conspiracy to commit money laundering
Outcome:
Budovsky pleaded guilty in 2016 and was sentenced to 20 years in prison.
Significance:
Liberty Reserve became the template for later prosecutions of mixers. It introduced the idea that any service intentionally designed to conceal transactional origin functions as an “unlicensed money transmission business” and triggers BSA and AML obligations.
Core Legal Principles Derived from These Cases
Bitcoin = Money: Courts (especially in Harmon) have repeatedly ruled that Bitcoin and other cryptocurrencies qualify as “money” or “funds” under U.S. criminal statutes.
Mixing = Concealment: When a service intentionally obscures transaction trails to hide illicit origins, it meets the definition of “money laundering.”
Licensing Required: Any business transmitting value for others (even crypto) must register with FinCEN under the Bank Secrecy Act.
Developers’ Liability: Writing or operating code that knowingly facilitates laundering (e.g., Tornado Cash) can create criminal liability, even without direct custody of funds.
Blockchain Forensics Accepted: Courts now recognize on-chain tracing as admissible and reliable evidence (e.g., Sterlingov).
Summary Table of Major Bitcoin Mixing Criminal Cases
| Case | Year(s) | Service | Main Charges | Outcome | Key Takeaway |
|---|---|---|---|---|---|
| U.S. v. Larry Harmon | 2020–2023 | Helix | Money Laundering, §1960 | Guilty plea, BTC forfeiture | Bitcoin = money; mixing = laundering |
| U.S. v. Sterlingov | 2021–2024 | Bitcoin Fog | Money laundering | Convicted | Blockchain analysis valid evidence |
| U.S. v. Gary Harmon | 2021–2023 | Helix funds theft | Money laundering | Guilty plea | Obstruction via crypto theft punished |
| Netherlands v. Pertsev | 2022–2024 | Tornado Cash | Money laundering | Convicted | Developer liability for mixer use |
| U.S. v. Semenov | 2023–ongoing | Tornado Cash | Sanctions, laundering | Pending | DAO founders can be liable |
| U.S. v. Bitmixer Ops | 2017–2019 | Bitmixer.io | Money laundering | Pleas and forfeitures | Early precedent for mixer crimes |
| U.S. v. Budovsky | 2013–2016 | Liberty Reserve | Money laundering | 20 years | Blueprint for modern crypto AML cases |
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