Reggie Fowler – former investor in the Minnesota Vikings and the Alliance of American Football – has been arrested, with possible connection to the ongoing alleged Bitfinex and Tether cover-up.
The story so far
Attorney General Letitia James stated: “our investigation has determined the operators of the ‘Bitfinex’ trading platform, who also control the ‘Tether’ virtual currency, have engaged in a cover up to hide the apparent loss of $850 million”.
Bitfinex itself has starkly denied any wrongdoings stating the court filings “were written in bad faith and are riddled with false assertions”.
Since then, Reginald Fowler of Arizona and Ravid Yosef of Israel have each been charged with one count of bank fraud and one count of conspiracy to commit bank fraud.
Fowler is also charged with one count of operating an unlicensed money transmitter business.
Fowler has been arrested while Yosef remains at large. The pair worked for several related companies that provided fiat-currency banking services to various crypto exchanges.
They allegedly participated in a conspiracy in which Fowler made several numerous false and misleading statements, opening bank accounts that were used to receive deposits from individuals purchasing crypto. Fowler and Yosef also falsified electronic wire payment instructions to conceal the true nature of voluminous crypto exchange business.
The news emerged after funds had been seized from a HSBC Bank USA account – 141000147 – which had been held by Global Trading Solutions LLC.
Back in October 2018, Larry Cermak revealed in a tweet that Bitfinex had started banking with HSBC through a private account of Global Trading Solutions LLC.
To add to the complex situation Crypto Capital – which has connections to Bitfinex – is owned by Global Trade Soltuions A.G.
As per the court order against Bitfinex, “the filings explain how Bitfinex no longer has access to over $850 million dollars of co-mingled client and corporate funds that it handed over, without written consent or assurance, to a Panamanian entity called Crypto Capital Corp”.
US Attorney General Geoffrey S. Berman has stated: “Reginald Fowler and Ravid Yosef allegedly ran a shadow bank that processed hundreds of millions of dollars of unregulated transactions on behalf of numerous cryptocurrency exchanges”.
“Their organisation allegedly skirted the anti-money laundering safeguards required of licensed institutions that ensure the US financial system is not used for criminal purposes, and did so through lies and deceits”, he adds.
The unsealed indictment
While the exchange advertised itself as providing ‘Know-Your-Customer’ and ‘Anti-Money Laundering’ verification services in connection with the exchange platform – this was actually “false” with respect to the shadow banking services provided by Fowler and Yosef.
Fowler and Yosef have allegedly conspired to misrepresent the nature of the crypto companies’ business and falsely stated there would be real estate investments made to the international bank in an account owned by the crypto companies.
The misrepresentations appeared on wire transfer instructions sent out from bank accounts owned and maintained by Fowler and Yosef, among others, on behalf of the crypto companies.
Records reportedly reveal that dozens of people had wired millions of dollars into the account owned by Fowler and at the same time, the same bank account wired millions to other individuals and companies.
Even though Fowler was reportedly receiving and directing the transactions, neither he or any of the crypto companies were licensed as a money transmitting business – as required by federal law.
Connecting the dots
It would seem that the international bank referenced by the unsealed indictment could well be the HSBC account which recently had funds seized – particularly considering, as per reports, it was held by Global Trading Solutions LLC.
Bitfinex reportedly banks with HSBC through Global Trading Solutions LLC.
Global Trading Solutions LLC also owns Crypto Capital – who according to court orders received Bitfinex’s missing funds directly from the exchange.
At the heart of it all appears to be Reggie Fowler and Ravid Yosef who have allegedly used these companies to circumvent US regulatory laws.
While there is no definitive evidence to suggest Bitfinex’s missing funds are a byproduct of Fowler and Yosef’s alleged criminal activity, the dots revealed in the unsealed indictment seem to eerily mirror other events leading up to the news.
At the very least Bitfinex has deep ties to all of HSBC, Global Trading Solutions and Crypto Capital – which all seemingly have connections of their own to Fowler and Yosef. Only time will tell if the connections bear any real fruition or if it is all coincidental, though Fowler’s arrest would lend to the speculation.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.