474 F.Supp.3d 76
D.D.C.2020Background
- Larry Dean Harmon allegedly owned and operated Helix, a bitcoin “tumbler” on the Darknet (linked to Harmon’s Grams), which mixed and re‑distributed bitcoin to conceal sources and owners.
- Indictment (Dec. 3, 2019) charged Harmon with (1) conspiracy to launder monetary instruments (18 U.S.C. §1956(h)), (2) operating an unlicensed money transmitting business (18 U.S.C. §1960(a)), and (3) violating the D.C. Money Transmitters Act (MTA) (D.C. Code §26‑1023(c)).
- The indictment alleges Helix handled ≈354,468 BTC (≈$311 million) between 2014–2017 and that a large share of flows involved Darknet markets (e.g., AlphaBay).
- Government alleges Helix was neither licensed by D.C. nor registered with FinCEN; Harmon moved to dismiss Counts Two and Three for failure to state an offense.
- Two central legal questions: (1) Is bitcoin “money” under the D.C. MTA? (2) Was Helix a “money transmitting business” under 18 U.S.C. §1960 (and related BSA/Fincen rules)? The Court denied Harmon’s motion on both counts.
Issues
| Issue | Plaintiff's Argument (United States) | Defendant's Argument (Harmon) | Held |
|---|---|---|---|
| Is bitcoin “money” under the D.C. Money Transmitters Act? | MTA uses ordinary meaning of “money”; bitcoin is a medium of exchange, unit of account, store of value and therefore falls within MTA; D.C. licensing practice and MTA purpose support coverage. | The UCC definition (D.C. Code title 28) limits “money” to government‑authorized currency; that specialized definition should govern; past agency statements show virtual currency was not treated as regulated. | Bitcoin qualifies as “money” under the MTA’s ordinary meaning; Count Three survives. |
| Did Helix operate an “unlicensed money transmitting business” under 18 U.S.C. §1960(b)(1)(B) / BSA regs? | Helix accepted bitcoin from customers and transmitted (remitted) bitcoin to designated recipients/addresses; BSA/FinCEN definitions and guidance encompass virtual‑currency exchangers and mixers as money transmitters (transmission to another person/location). | Helix merely returned bitcoin to the same user or moved tokens on a single blockchain (no change of “location” or transmission to a third party), so it is not a money transmitter under §1960/BSA regs. | Helix, as alleged, transmitted bitcoin between accounts/addresses (different persons or locations); FinCEN guidance and statutory/regulatory language support treating mixers/exchangers as money transmitters; Count Two survives. |
Key Cases Cited
- United States v. Lord, 915 F.3d 1009 (5th Cir.) (describing bitcoin as a decentralized digital currency)
- United States v. Brown, 857 F.3d 334 (6th Cir.) (characterizing bitcoin as a virtual currency)
- United States v. Costanzo, 956 F.3d 1088 (9th Cir.) (discussing bitcoin as an alternative currency transferable without banks)
- United States v. Faiella, 39 F. Supp. 3d 544 (S.D.N.Y. 2014) (holding bitcoin can constitute "money" for statutory purposes)
- United States v. E‑Gold, Ltd., 550 F. Supp. 2d 82 (D.D.C. 2008) (holding virtual‑currency exchangers may fall within money‑transmitter statutes and §1960)
- United States v. Ulbricht, 31 F. Supp. 3d 540 (S.D.N.Y. 2014) (treating bitcoin as a medium facilitating transactions)
- United States v. Murgio, 209 F. Supp. 3d 698 (S.D.N.Y. 2016) (applying §1960/BSA principles to virtual currency operations)
- Mohamad v. Palestinian Auth., 566 U.S. 449 (2012) (statutory terms given ordinary meaning when undefined)
- Hamling v. United States, 418 U.S. 87 (1974) (indictment sufficiency: track statutory language and set forth essential facts)
- Russell v. United States, 369 U.S. 749 (1962) (indictment must inform defendant of nature of accusation)
- United States v. Mazza‑Alaluf, 621 F.3d 205 (2d Cir.) (discussing §1960 and related proof requirements)