A banker in the mafia? – Shadow banking, former NFL owner, unbacked stablecoins, and Colombian drug cartels… it sounds like a B-movie plot, but that’s the reality surrounding Reginald Fowler, the alleged shadow banker of Tether. Let’s take a look back together at the Crypto Capital case that rocked the Bitcoin (BTC) ecosystem in 2019.
A look back at the Crypto Capital case
In April 2019, iFinex, the parent company of Tether and Bitfinex, was implicated in the United States for its questionable use of its subsidiaries’ funds. Indeed, iFinex allegedly used $850 million from Tether’s accounts to cover Bitfinex’s losses.
At the source of this case is Crypto Capital. The Panama-based company served as a middleman for Bitfinex, which was unable to secure the services of a traditional bank. At that point in the history of the cryptosphere banks had no use for cryptocurrency companies and systematically refused to open an account for them. This state of affairs prompted Bitfinex to use the services of Crypto Capital.
However, once the Panamanian company received its first transfer from Bitfinex, its executives vanished. As a result, the exchange had to face a significant cash deficit. In order to fill the gap, Bitfinex dipped into the reserves of Tether.
In February 2021, Bitfinex reached an amicable agreement with the U.S. justice. The exchange had to pay a fine of $18.5 million without having to admit to fraud.
Behind the company Crypto Capital was a colorful character: Reginald Fowler. Fowler started his career as an American football player, before becoming a businessman. In 2005, he invested in the Minnesota Vikings franchise, but exited the business in 2014 due to a lack of funds to pay off the debts of the losing franchise. After that, the sportsman turned into a financier specializing in shady deals.
Reginald Fowler’s trial to be held in 2022
Reginald Fowler is accused of providing shadow banking services through the company Crypto Capital. This company has ties to iFinex, as well as to Colombian cartels. During the month of August, the court set a trial date for these done in the first quarter of 2022.
In October 2019, Crypto Capital boss Ivan Lee was arrested in Poland. This led to the seizure of over $350 million in funds in one of Crypto Capital’s subsidiaries. And, those funds allegedly contained money laundered for Colombian cartels. Global Trading Solutions, a Fowler company, was one of Crypto Capital’s major clients and actively involved in its operations.
As of December 2019, Fowler has therefore been charged with bank fraud, illegal transfer of funds and aiding and abetting shadow banking. The shadow banking charges allege that Crypto Capital provided banking services to Bitfinex, Binance and other unregulated exchanges.
Two years later, the proceeding is still ongoing, despite some twists and turns. In December 2020, Fowler’s lawyers withdrew from the case because their client wasn’t paying them.
In February 2021, the courts offered Fowler a plea of guilty, without going to jail. The only downside: Fowler had to pay a $371 million fine in order to avoid jail time. It was clearly impossible for someone who did not pay his lawyers to pay such a sum. The former athlete therefore refused the deal. The final judgement in this case will therefore come at the beginning of 2022.
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