A part of Bitfinex’s $850 million funds has been confiscated by the U.S. Department of Justice (DoJ). A businessman called Reginald Fowler was arrested for setting up various false bank accounts which he used to move money by using Bitfinex to bypass bank and federal laws.
The seized funds in question were allegedly used in the bank fraud by making covert transfers in USD to the exchange’s users.
The accusations focus on Reginald Fowler and how he committed fraud by using unnamed cryptocurrency exchanges, to sidestep U.S. banks that ceased working with companies that dealt with digital currencies. Fowler and the undisclosed exchanges lied that the accounts used were only for cryptocurrency use.
The HSBC USA account with the 141000147 number is the main account in the fraud indictment. In addition to the fiat problem Bitfinex is facing, the exchange has also seen a huge outflow of cryptocurrency, which made withdrawing hazardous for its clients.
Bitfinex has had issues in finding a banking partner after Wells Fargo ceased their partnership with them.
In 2018 Bitfinex used the payment processing services of Crypto Capital, a private Panama-based financial entity. Crypto Capital announced Bitfinex that the $850 million they managed with them in the US, Poland, and Portugal were seized by US authorities.
“The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million “loss” at Crypto Capital. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded. We are and have been actively working to exercise our rights and remedies and get those funds released.”– posted Bitfinex on their website.
But less than a month ago CryptoCapital removed Bitfinex from its list of clients. CryptoCapital had issues and it tried to hide from the banks the real purpose for what the accounts were used. This has led to funds being frozen and prompted US authorities to make arrests in matters of ad-hoc banking with cryptos.
The investigation also showed that Reginald Fowler was involved with Crypto Capital.
Seeing as it has gone tough some serious hacks, Bitfinex’s reputation has taken another blow from the news of fraud and frozen funds.
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