Last year, we covered the case of the Harmon brothers,1 whose darknet crypto mixing business was shut down for money laundering. The IRS had seized various assets, including a cryptocurrency storage device that the IRS was not able to crack the password for.
However, one of the brothers was able to recover $4.9 million in bitcoin (now worth over $20 million) from that cryptocurrency account because he knew the password, which allowed him to transfer the cryptocurrency from the seized account to his own wallet. Naturally, one of the first things he did (after further laundering the recovered bitcoins) was visit a nightclub, fill a bathtub with cash, and take a bunch of selfies.
Update: He was sentenced to four years for stealing over 712 bitcoins that were the proceeds of the darknet bitcoin mixer and subject to forfeiture in the then-pending criminal case against his brother.2
Mix master
Crypto mixing, or crypto tumbling, mixes potentially identifiable or "tainted" cryptocurrency funds with others to hide the fund’s original source.3 Funds from multiple sources are pooled together for a random period of time, and then they are redistributed at random times, making it difficult to trace the cryptocurrency’s source.
Mixing helps protect and maintain the privacy of using cryptocurrency. But due to its involvement in illegal activities, and because mixing services have been known to steal coins during the mixing process, many have suggested that mixing services be criminalized.
