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Indictment reveals new clues in the Crypto Capital situation

Robert-Jan den Haan
Cryptocurrency exchange Bitfinex has announced it is committing 27% of past and future revenues from its recently launched initial exchange offering (IEO) platform Tokinex to buy back its native LEO token. The post Bitfinex commits a portion of revenues from its IEO platform toward LEO token burns appeared first on The Block.

A superseding SDNY indictment unsealed yesterday charged two individuals with multiple felonies including bank fraud. Although the case makes mention of processing payments for cryptocurrency exchanges, it also helps put some pieces together in the unfolding story of Crypto Capital, the payment processor that reportedly had $850 million belonging to Bitfinex seized.

The indictment revealed that Reginald Fowler, also known as Reggie Fowler, former co-owner of the NFL’s Minnesota Vikings, and Ravid Yosef, from Tel Aviv, Israel, are being charged by the Southern District of New York (SDNY) with bank fraud and conspiracy to commit bank fraud. Fowler is also accused of running an unlicensed money transmission business and conspiracy related to its operation.

Their names may not ring a bell to anyone in the cryptocurrency community, but the company mentioned in the indictment document, Global Trading Solutions LLC, may. The company, owned by Fowler, was described as an agent for Crypto Capital to The Block. As written in the indictment, Fowler and Yosef obtained bank accounts after “falsely represent[ing] to those banks that the accounts would be primarily used for real estate investment transactions even though Fowler, Yosef, and others to transmit funds on behalf of an unlicensed money transmitting business related to the operation of cryptocurrency exchanges.”

The others in that quote includes Crypto Capital, or rather the Swiss-based Global Trade Solutions AG that runs its operations. From earlier reporting by The Block, we know that one such account was at HSBC, which was used by Crypto Capital to process fiat deposits for Bitfinex. Based on information provided by sources including customers of Bitfinex and Crypto Capital, who spoke to The Block under conditions of anonymity, Global Trading Solutions LLC also had bank accounts at Citibank, Enterprise Bank & Trust and Wells Fargo used by Crypto Capital.

The links to Fowler also go beyond the U.S. border. Fowler co-owns the two Portuguese companies through which, as reported earlier by The Block, Crypto Capital processed fiat withdrawals for Bitfinex. However, the activities of the companies, MOGW ENERGY TRADE LDA and Eligibility Criterion Unipessoal LDA, have nothing to do with cryptocurrencies, let alone financial services. According to their registration, their activity lists various consulting and construction services, suggesting the false pretenses to obtain bank accounts were not limited to the U.S. either.

The indictment unsealed yesterday therefore must be seen in the context of the New York Attorney General (NYAG) suing Bitfinex last weekend. There is a near-zero chance that indictment by the SDNY is not related to or has not sprung from the investigation by the NYAG’s office into Bitfinex and particularly Crypto Capital. Although indictments usually refrain from revealing more information than necessary, the fact that Crypto Capital is referred to as “others” in the indictment likely means there is more to come.

Obtaining bank accounts

As the indictment makes clear, Fowler and Yosef opened numerous bank U.S. accounts under false pretenses. The indictment further presents a list of bank accounts at HSBC, either in name of Global Trading Solutions LLC or directly in Fowler's name, from which the funds were seized by the U.S. Government.

The known bank accounts in name of Global Trading Solutions LLC, and used by Crypto Capital, provide further insights into how Fowler went about opening bank accounts and shows how he seemingly made some effort to obfuscate his association with Global Trading Solutions LLC.

For instance, documents in the public registry instead list Jean Gries, an Arizona-based notary, as the person filing for the company. In other public registry filings however, Jean Gries signs documents on behalf of Fowler’s businesses. In wire details obtained by The Block, Jean Gries also appears as an approver for fiat withdrawals from Bitfinex, processed by Crypto Capital, in connection to a bank account at Revolut in the U.K.

Speaking of bank accounts, the address of the known HSBC account matches the address in Chandler, Ariz. where Global Trading Solutions LLC is registered. However, the property at that address, a sports complex, is owned by another company related to Fowler.

Another bank account at Wells Fargo listed an address in Tampa, Fla. That address lists a different company however, called NLE Consulting, whose registry documents list Fowler as an officer. Crypto Capital used the account for its own customers, but there is no indication that it was used to process any Bitfinex fiat deposits or withdrawals. Fowler used an address in Huntington Beach, Calif. to obtain an account at Citibank. No company is registered at the listed address.