Ohio man Gary James Harmon was sentenced to four years and three months in prison for stealing 712 bitcoins belonging to his brother, the U.S. Department of Justice announced.
Gary James Harmon, who pleaded guilty in January to criminal charges, faces a combined maximum of 40 years in prison for one count of wire fraud and ongoing obstruction of justice.
According to the U.S. Department of Justice, Gary James Harmon stole the 712 bitcoins, which were worth about $4.8 million at the time but have now appreciated to $21 million, after his brother Larry Dean Harmon was arrested in 2020.
Larry Dean Harmon was arrested for operating a token mixing service called Helix, which processed more than 350,000 bitcoins between 2014 and 2017, and worked with multiple darknet markets.
Larry Dean Harmon later pleaded guilty in 2021 to counts of conspiracy to launder money and transactions related to improper funds. In addition to the criminal charges, he was also fined $60 million by the Financial Crimes Enforcement Network (FinCEN), which was also imposed on coin mixing services. The first instance of a fine.
The Justice Department said that while the government was seeking to recover bitcoins stored in Larry Dean Harmon’s cold wallet, Gary James Harmon knowingly re-established the bitcoin wallet using his brother’s credentials and “surreptitiously” removed the device. The 712 bitcoins in it were sent to himself, and then further money laundering through two other online token mixing service providers, and then used these funds to go shopping spree and pay large expenses.
Law enforcement seized several crypto assets in the case, including: 17.4 million Dogecoins, about 647 bitcoins and two ethers worth more than $20 million, the Justice Department said.
While advocates for coin-mixing services say such tools are necessary to keep cryptocurrency transactions private, governments are targeting them as key to cracking down on hackers and bad actors.
Token mixing services mix transactions together to confuse the source and destination of funds. The U.S. Treasury Department announced sanctions last summer against token mixing service Tornado Cash, barring Americans from using the app.
Coin Center, a cryptocurrency policy nonprofit, is now suing the U.S. Treasury Department, alleging that authorities overstepped their authority and blacklisted the tool. Separately, a Dutch court recently ruled that Tornado Cash developer Alexey Pertsev can be released on bail after nine months in detention.