Brother of man who ran Helix cryptocurrency mixer jailed for stealing 712 bitcoin
Gary Harmon, the brother of the man jailed for operating the Helix cryptocurrency mixer, was himself on Thursday jailed for stealing bitcoin his brother’s operation had generated while it was subject to forfeiture.
Harmon, 31, from Cleveland, Ohio, has been sentenced to four years and three months in prison for using the seed recovery words to recreate his brother’s offline cryptocurrency wallet while it was in the possession of the FBI.
Larry Harmon, Gary’s brother, ran the Helix mixer from 2014 to 2017. He had partnered with various dark web markets — including AlphaBay, Cloud 9, and Evolution — to provide tumbling services to their customers.
Tumbling or mixing services generally charge a fee to pool together large amounts of funds from various owners, then "mix" the funds together and distribute them back out to destination addresses, which makes it difficult to trace digital coins to their original owners.
Prosecutors said over the course of its operations Helix moved over 350,000 bitcoins, amounting to more than $300 million at the time of the transactions.
Following Larry Harmon’s arrest in February 2020, law enforcement seized a range of assets from him including a Trezor Model One hardware wallet, which was found magnetically attached to the underside of a table at one of his properties.
Although the cryptocurrency stored on this device was subject to forfeiture in the criminal case, due to “additional security features” the FBI was initially unable to recover the digital assets.
To physically access the hardware, investigators would have needed to plug it into a computer and enter a passcode, but Trezor devices also allow users to create “hidden wallets” that are protected by an additional passphrase, without which they are not only inaccessible but invisible on the storage system.
According to court documents, the FBI only learned of these hidden wallets after recovering a spreadsheet from Larry Harmon’s Google Drive account that stated he had more than $56 million in cryptocurrency assets in hidden wallets.
While the FBI was attempting to break into the storage device, Gary Harmon — who was not at that point under arrest — effectively recreated the device’s bitcoin wallets using the recovery seed words, including the 16 hidden wallets.
Gary Harmon then transferred more than 712 digital coins — valued at $4.8 million at the time, and over $20 million today — into new wallets. These transfers were observed by law enforcement’s blockchain monitoring specialists.
According to the U.S. Department of Justice, whoever was behind the transfers then “further laundered the proceeds through two online bitcoin mixer services before using the laundered bitcoins to finance large purchases and other expenditures.”
The FBI conducted a voluntary interview with Harmon at this stage, and he denied any knowledge of the transactions.
However, despite being unemployed and living what court documents described as “a modest lifestyle” prior to the removal of the bitcoins, shortly afterward Harmon “began making thousands of dollars in unexplained cash deposits into his bank accounts.”
These purchases included a 2018 Audi S5 luxury automobile; flights by TapJets, a private charter jet company that accepts bitcoin as payment; and, on February 12, 2021, more than 16 million dogecoins.
Harmon was arrested on July 28, 2021, at his "luxury condominium unit" in Cleveland. He pleaded guilty in January 2023 to wire fraud and obstruction of justice and agreed to forfeit more than 647.41 in bitcoin, 2.14 ethereum, and 17,404,400.64 dogecoin.
The U.S. Department of Justice stated that “due to the increase in market prices, the total value of these forfeitable properties exceeds $12 million.”
Alexander Martin is the UK Editor for Recorded Future News. He was previously a technology reporter for Sky News and is also a fellow at the European Cyber Conflict Research Initiative.