Criminal’s Brother Swipes $5m Bitcoin Back From Darknet Seizure

Come listen to the story of Gary Harmon, brother to convicted Helix Dark Web Bitcoin mixer founder, and how he stole over $5m of Bitcoin law enforcement previously seized from Larry! This is eCrimeBytes.com S 2 Ep 7-1 Criminal’s Brother Swipes $5m Bitcoin Back From Darknet Seizure – Act 1: Helix, A Dark Web Bitcoin Mixer.

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Transcript:

00:00:10:00 – 00:00:40:24
Keith
Hey, welcome to eCrimeBytes Season two Episode seven can’t even we’re at episode seven already. This one, as succinctly as I can put the title is a Criminal’s Brother swipes $5 million worth of seized bitcoin. So there’s a lot of implication in this title. There’s the implication that there’s two criminals and they’re brothers and that somebody had Bitcoin seized from them, from law enforcement, and one of the brothers stole some of it back.

00:00:40:24 – 00:00:45:14
Keith
So this is going to be a really interesting case in my opinion, because

00:00:45:22 – 00:01:03:16
Keith
it’s a case that highlights the difference between real currency when it’s seized by law enforcement and cryptocurrency, when it’s seized by law enforcement, you’re going to see something happen with the cryptocurrency in here that you can’t do with physical money, at least that I know of.

00:01:03:18 – 00:01:31:06
Keith
And it just makes it very, very interesting twist on the story. So I gave you the technology, which is cryptocurrency. I told you why this case, which is the big twist and the difference of physical money, the crimes are they’re going to be money laundering, they’re going to be wire fraud, and there’s going to be this other thing obstructing of proceedings, which is kind of like if you ever hear where they charge somebody with tax fraud.

00:01:31:06 – 00:01:54:14
Keith
It’s kind of like that thing that you put on there where you say, Hey, you stopped me from doing my investigation. It’s kind of a catch all because in this case, what the brother does slows law enforcement down. Now, the criminals here as two brothers, it’s Gary Harmon and Gary Harmon is the brother of Larry Harmon. And you’re going, oh, my God, Gary and Larry.

00:01:54:14 – 00:02:17:17
Keith
I can’t believe they named them that. And that’s almost as bad as maybe a couple of brothers from Michigan who are named Keith and Kris Jones. And they’re both start with a K and they’re always screwed up. But my dad had to call them, too. So I can only imagine Gary and Larry’s dad, when he got pissed at one of them, probably screwed it up and called the other one’s name because that’s what my dad did when he was pissed at me.

00:02:17:18 – 00:02:38:13
Keith
Always call my brother’s name. Now, the victims in this case, primary victim, is going to be law enforcement. You can argue, you know, taxpayers and all that behind the scenes indirectly were victims, but primarily the ones you’re going to see here, the front line responders, they’re the ones that are the victims in this case.

00:02:38:13 – 00:02:42:20
Keith
So this week, we have four acts for you, the very first act.

00:02:42:23 – 00:03:03:03
Keith
We’re going to give you some background and this is going to be act one on Monday. And this is what you’re watching right now. Helix, a dark web Bitcoin mixer. And if you go, what’s a mixer? Don’t worry. We’re going to tell you what that is in a second. Act two, which is on Tuesday, it’s going to be meet Gary Harmon, which is Larry’s brother.

00:03:03:06 – 00:03:12:22
Keith
And then Act three, which is on Wednesday is going to be Gary is caught and then act four we’re going to cap it off with sentencing and that’s going to be on Thursday.

00:03:12:22 – 00:03:23:16
Keith
So with that, we’re just going to go ahead and jump into Act One Helix, a dark web Bitcoin mixer. So if you’ve never been in the dark Web, don’t worry.

00:03:23:16 – 00:03:56:19
Keith
You don’t need to to understand this episode. Just know that there’s this other place on the Internet you can get to with a special browser that’s kind of like the web that you usually visit. Now because people go to the dark web, usually for bad purposes, they will try to pay for things with cryptocurrency. Now, if you’ve been following along in any of these episodes that Seth and I brought to you, there’s some analysis you can do with cryptocurrency and still kind of trace it back to a person.

00:03:56:21 – 00:04:05:25
Keith
And we saw, you know, different episodes where there were blockchain analysis by law enforcement and they would track it back to a certain

00:04:05:25 – 00:04:21:26
Keith
wallet and they would serve a subpoena and get that person’s information. So in order to buy things a little more anonymously, or at least anonymously enough so law enforcement might not catch you, you might run your Bitcoin through some mixers.

00:04:21:26 – 00:04:26:11
Keith
And what this does is it puts Bitcoin into a

00:04:26:11 – 00:04:32:25
Keith
I’ll just say, escrow. I don’t know if escrow is the right term, but it’s kind of like escrow where you give it to this

00:04:32:25 – 00:04:47:07
Keith
website called Helix. We’ll just use Helix’s name here. And what they did is because they’re an organization with all these places giving Bitcoin to them, then they send the payments out.

00:04:47:09 – 00:04:54:03
Keith
Depending on how these people are putting Bitcoin in to set it up. So for instance,

00:04:54:03 – 00:05:15:10
Keith
let’s say there’s ten individuals and they have ten wallets and they give Bitcoin to Helix and these wallets that it’s going in will be like one through ten, right? When the, when the bitcoin leaves Helix, you can imagine it goes through accounts 11 through 20.

00:05:15:13 – 00:05:51:27
Keith
So it’s not associated with one through ten anymore. Now you’re leaving Helix in 11 through 20. So what that does is that anonymize Bitcoin that might be associated with the person through Helix and then Helix will then pay it on behalf of whoever the person paying says to pay it to. Now for this wonderful service of anonymizing your bitcoin Helix charges a 2.5% fee per transaction, which doesn’t sound like much, but listen to the numbers here in a second.

00:05:52:00 – 00:06:26:26
Keith
So Helix specifically was one Bitcoin mixer. What I explained to you earlier was just Bitcoin mixers generally. Helix was one of them that was out there. Now Helix itself exchanged over 354,000 bitcoins and we’re talking back at the time of the crime, this was 311 million and you’re going to find out things appreciate over time. So this this amount of Bitcoin is the amount of money now is astounding.

00:06:27:00 – 00:06:47:17
Keith
It’s astounding. So we also know from later block chain analysis that Helix made at least 4877 Bitcoin from this these transactions that they facilitated could be more. But this is the number we’re going to go by because this is what the court says it was.

00:06:47:17 – 00:07:01:08
Keith
So if you use the same cost of, you know, how many dollars per bitcoin, if I just did that math for you, that 4877 using that same translation would be $4.2 million.

00:07:01:08 – 00:07:08:23
Keith
So it’s a hefty chunk of change that they make off a top of just doing this mixing that they do

00:07:08:23 – 00:07:31:17
Keith
now, they advertise it. So it’s not like they just do this and people figure it out you could actually anonymiz it. This is what they do. They advertise that they they anonymize your Bitcoin transactions and, you know, they give all sorts of like technical jargon to why you should use them.

00:07:31:19 – 00:07:55:29
Keith
You know, one of the things they said and and again, this will get traced to the brothers later on because they were involved with this whole enterprise. It says Helix uses new addresses for each transaction. So there is no way law enforcement will be able to tell which addresses are Helix addresses. So basically his meaning, he’s kind of scrambling it up and he’s making the blockchain analysis a lot more difficult for law enforcement.

00:07:56:01 – 00:08:13:21
Keith
He goes on to say something like, No one has ever been arrested just for Bitcoin taint, and I’d stop there. And I was like, Oh my God, the kid in me, I can’t even read the word taint without cracking a smile. But he said, No one has ever been arrested, just through Bitcoin taint. But it is possible. And do you want to be the first?

00:08:13:23 – 00:08:40:21
Keith
Most markets use quote unquote hot wallets. I guess that would be double quotes because it’s a quote inside of quote. He goes on to say, they put all their fees into these wallets. Law enforcement just needs to check the taint on these wallets to find all the addresses a market uses. Okay. Now, if a lot of that went over your head, don’t worry what you need to get out of that… if you’re a technical person and you

00:08:40:22 – 00:09:12:15
Keith
understood it. Cool. That’s why I read it for you. If you’re not, don’t worry. What you need to understand out of that is he went to great technical lengths and I say he actually I mean, the brothers went to great technical lengths to make their mixing service be as anonymous as possible. So they didn’t reuse accounts and things like that, or try to make or try to put proceeds into accounts that would be traceable that other mixing services would typically do according to that.

00:09:12:18 – 00:09:13:07
Keith
Now,

00:09:13:07 – 00:09:19:13
Keith
Alphabay is one of those websites out there that provides,

00:09:19:13 – 00:09:28:26
Keith
I guess, illicit services depending on what it is you want to buy off there. And they had something to say about Helix. So why don’t you tell us what that was Seth.

00:09:28:26 – 00:09:55:29
Seth
So Alphabay was a darknet market, and they were an operation from, like, late December 2014 through, like, the summer of 2017. And that site was seized by law enforcement. But at the time of the seizure, alphabay was the largest darknet marketplace in operation, and they offered a platform for customers to purchase a variety of illegal drugs, guns and other good, really interesting illegal stuff.

00:09:56:02 – 00:10:09:24
Seth
So in or about November of 2016, this is all from the court documents the Alphabay website recommended to its customers that they use a Bitcoin tumbler service to, quote, erase any trace of their coins coming from Alphabay close quote.

00:10:10:19 – 00:10:23:27
Keith
All right. So this is the time where I show you some pictures of Larry Harmon. This is the first brother. I haven’t introduced you to Gary. We’ll get to him in a second. But this is Larry Harmon. This is the owner of Helix. The service that we’ve been telling you about.

00:10:24:00 – 00:10:43:03
Keith
This is one picture that he had just on his Twitter. You can go and check it out. Just Coin Ninja CEO. Oh, I guess it would be called X now which I’m I’m always going to call it Twitter. X looks absolutely horrible. I try not to give a ton of opinion on this show, but switching from Twitter to X is just a visual eyesore in my opinion.

00:10:43:03 – 00:10:48:25
Keith
Now, here’s another picture of Larry. This is from Coindesk. And you go, Oh, he’s in a car. Cool.

00:10:48:25 – 00:11:02:01
Keith
And then I found his LinkedIn picture, which to me was kind of backwards because his LinkedIn picture kind of looks like he’s longing for a mate.

00:11:02:04 – 00:11:26:07
Keith
Right? He’s kind of looking off into the distance. It’s black and white. He looks like he’s pondering something. It’s definitely use it on like your singles profile somewhere. Definitely this picture and I’m saying this for audio listeners video people, you could see this, but for our audio listeners, it’s just it’s it’s a much more romantic looking picture than the first two pictures that we showed you earlier.

00:11:26:07 – 00:11:31:17
Keith
And just to describe, he’s probably, I don’t know, maybe a middle aged

00:11:31:17 – 00:11:42:27
Keith
white male, clean shaven, short hair, Nothing remarkable about him that we can even you know comment on, really. And

00:11:42:27 – 00:11:50:27
Keith
yeah, I thought that was pretty interesting that it was like his personal pictures looked more professional than his LinkedIn picture which kind of looked like he was longing for a spouse.

00:11:50:29 – 00:12:01:08
Seth
Yeah, but maybe he was going for like the, you know, the grungy, you know, Silicon Valley look. Right. That that I guess permeated the early 2020s. He doesn’t that anyway,

00:12:01:08 – 00:12:24:09
Seth
early 2020 February six, Larry Harman is arrested. He was accused of money laundering and he had various properties in Akron, Ohio, Akron, Ohio. Three of them were searched. His San Pedro Belize condo was searched too. Guy’s rollin in some good real estate, February 10th of 2020.

00:12:24:09 – 00:12:30:23
Seth
So four days after the arrest is Northern California apartment was also searched. What did they find?

00:12:30:23 – 00:12:41:02
Keith
Jones? They found something that we’ve talked about at least twice, maybe three or more times called a Trezor wallet.

00:12:41:02 – 00:12:54:21
Keith
Now I’m going to say this for the people that are joining us for the first time on our episode, I apologize if you’ve actually listened to all of our episodes and we’ve said this a few times about Trezor wallets, I actually found out some new things here that actually pertain to this case.

00:12:54:21 – 00:13:05:06
Keith
So even though you want to skip ahead, do stick with us because you’re going to hear about some stuff that we have not talked about previously, about Trezor wallets. So

00:13:05:06 – 00:13:16:20
Keith
in a nutshell, there’s this cryptocurrency out there, which is virtual currency. It’s not like bills that you hold in your hand, but it’s numbers that accounts and wallets own.

00:13:16:23 – 00:13:32:05
Keith
And there is a physical device called a Trezor wallet that you can store your virtual coins. I know kind of mind blowing, right? But think of it. It’s kind of like a hard drive in a way. Okay.

00:13:32:05 – 00:13:32:27
Keith
Now,

00:13:32:27 – 00:13:40:04
Keith
in this search, the FBI, they go through everything and they go through like cereal boxes to make sure you’re not hiding stuff in there.

00:13:40:04 – 00:14:07:05
Keith
They go through your heating ducts, they go through everything. And one of the things they did is they flipped over a table and they said, Aha, Larry had a Trezor wallet magnetically attached underneath the table. And for our video people, I will show you a picture of this now and it’s you can actually see the FBI agents picture in the reflection as it’s the Trezor wallet on the table.

00:14:07:08 – 00:14:33:29
Keith
And it’s just a I don’t know, it’s about a credit card ish sized device. It’s black. It’s got a screen on it. And I do have a clear picture from Trezor’s website to kind of just give you a more of a lay of the land that I’ll put on the screen for you. Now, there’s different models, so I know the model that I’m showing you is more of a newer model than the one that the FBI found that’s got a couple of buttons on it.

00:14:34:01 – 00:14:43:25
Keith
But you can imagine it’s just it’s like a little computer device that has similarities to a hard drive that you can store this cryptocurrency on. Now,

00:14:43:25 – 00:14:50:10
Keith
there’s a couple of ways you can use this device. You can use it as probably any normal person would use it. And you take your

00:14:50:10 – 00:14:53:25
Keith
Bitcoin and you put it on there and you just put it on there.

00:14:53:25 – 00:14:58:09
Keith
It’s just a wallet and you use it and you go, and you store it, just like a normal person.

00:14:58:09 – 00:15:00:13
Keith
There’s another mode you can use and

00:15:00:13 – 00:15:17:04
Keith
this particular mode they call a hidden wallet. Now, a hidden wallet. What that allows you to do is take cryptocurrency wallets, hide them on a Trezor, but not have the visible unless you have the certain password in order to make them visible.

00:15:17:04 – 00:15:39:19
Keith
So it’s not even like you can see them and you go, Oh darn, I don’t have the password. You need the password in order to see that there are hidden wallets on there. Okay. That was a new fact about Trezor wallets where I went okay, this is this is now getting pretty interesting. Here’s another twist. A Trezor wallet.

00:15:39:19 – 00:16:08:09
Keith
Let’s say I put all my bitcoin on Trezor wallet and then I left it in my pants pocket and it goes through the wash and I go, Oh fuck, I just lost all my bitcoin because it’s on this device that just went in the water. Trezor wallets have a recovery feature where when you set up your Trezor wallet you have, it’s basically this really really long passphrase and if you record it, guess what you can buy another Trezor wallet without your bitcoin on it.

00:16:08:12 – 00:16:15:28
Keith
Put in this passphrase and it magically reconstructs your bitcoin for you. It basically removes it from

00:16:15:28 – 00:16:24:14
Keith
the original spot and puts it on the new physical wallet for you. Okay, so now you’re seeing where this case is going right?

00:16:24:22 – 00:16:46:06
Seth
So the documents tell us that immediately after Larry Harmon’s arrest, law enforcement was unable to recover any cryptocurrency from the Trezor one wallet. Apparently, it actually held the 16 subject wallets containing proceeds and fees Larry Harmon generated through the operation of Helix, But the subject wallets were concealed within hidden wallets and were not visible to law enforcement.

00:16:46:23 – 00:16:54:22
Seth
So federal agents transported the Trezor one to a secure evidence locker in D.C. So can you tell us about the subject wallets and that what that means?

00:16:54:22 – 00:17:19:19
Keith
Okay. Well, the subject wallets are wallets that Larry Harmon had that he made money from Helix and all those 2.5% transaction, it went into wallets that he owned that are on that Trezor wallet. The most important thing I don’t want to skip over here is the last thing that Seth said is this wallet is now physically in an evidence locker that secure in Washington DC.

00:17:19:19 – 00:17:43:13
Keith
It’s not in either of the Harmon’s hands. So in most people’s minds you go, okay, these Bitcoin are locked up in some secure evidence vault. So keep that in mind. I’m going to tell you, between February and March of 2020, Larry Harmon, remember, he was arrested. There’s a lot of stuff in the legal process that we don’t go over with

00:17:43:13 – 00:17:59:10
Keith
you like motions and hearings and so forth. This point, I got to tell you, there were two hearings. And why this is important is because in both of those hearings, the government said we can’t get into this wallet that we have stored in our evidence locker.

00:17:59:10 – 00:18:05:08
Keith
And even knowing that the court decided that, Larry, he needs to be released.

00:18:05:09 – 00:18:28:08
Keith
So on March 13th of 2020, Larry was ordered released pending trial, but he had restrictions on his cryptocurrency transactions. Now, here’s a a big red flag bullet point here. Larry’s brother, Gary, he was at these hearings. So everything that I just told you, Larry’s brother, Gary, also knows.

00:18:28:08 – 00:18:30:00
Keith
And that’s it for Act One.

00:18:30:03 – 00:18:49:26
Keith
You’re going to have to come back for Act two, because we’re going to get immediately in Act two. We’re going to talk about Gary. I had to tell you everything about Larry, because without knowing about Larry and Helix, none of this is going to make sense once Gary enters the picture. So Gary’s the actual subject of this whole episode and you have to come back and act two, to hear about him.

00:18:49:26 – 00:19:11:23
Keith
So if you liked or enjoyed anything in this episode or this act, please, please, like or subscribe whatever application you’re on. If you’re on Apple Podcasts specifically, if you can leave us a five star review and just say anything nice that helps us move up the search charts there. And about half of our audio listeners come from Apple Podcasts, and that would really help us out.

00:19:11:23 – 00:19:19:28
Keith
Do visit our website. It’s just e crime bytes, e, c, r i, m e, b y as in yellow.

00:19:19:28 – 00:19:21:08
Seth
Milk t e s.

00:19:21:08 – 00:19:46:19
Keith
s dot com. And all our social media is either across the top. If you’re on a desktop or you click that button, the three line button on the top and it’ll pop up for you and you can pick your favorite social media to contact us. And so with that, I look forward to seeing you on Act two of eCrimeBytes Season two Episode seven Act two will be meet Gary Harmon, Larry’s brother.

DrKeithJones.com

Criminal’s Brother Swipes $5m Bitcoin Back From Darknet Seizure – Act 1: Helix, A Dark Web Bitcoin Mixer

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Transcript:

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