US prosecutors have sought a lengthy sentence for executive Reginald Fowler, accused of providing shadow banking services through Crypto Capital.
In fact, the crypto-banking case has been dragging on for five years now.
Below are all the details.
Summary
The indictment against Fowler for the case of crypto-banking through Crypto Capital
On 18 April, District Attorney Damian Williams filed a plea ahead of Reginald Fowler’s conviction in the crypto-banking case through Crypto Capital, initially scheduled for 20 April.
Fowler, former owner, albeit in a minor capacity, of the Minnesota Vikings NFL team, was initially arrested in 2019.
Specifically, the executive is charged with several illegal actions, including bank fraud, illegal money transfers and conspiracy related to suspicious banking practices for his alleged operation of an unlicensed money transmission business.
Hence, on behalf of the government, Williams requested a sentence of at least seven years in prison. Not only that, he also suggested a sentence of fifteen to twenty years in prison to make Fowler reflect on the seriousness of his crime.
Indeed, the excerpt from the filing of the case of United States vs Reginald Fowler reads as follows:
“The Government therefore respectfully request that the Court impose a prison sentence of at least 84 months, below the applicable range of the Guidelines of 188 to 235 months, to reflect the seriousness of the offence, the need to promote compliance with the law and to allow adequate specific and general deterrence. The Court should also impose a $53,189,261.80 restitution order on the Trustee of the Alliance of American Football and a $740,249,140.52 forfeiture order.”
All the exchanges involved in the Fowler case
We can see that the Fowler case starts way back in 2018, when the executive founded a company named Global Trading Solutions (GTS) under the control of Panama-based Crypto Capital Corp, an alleged parallel crypto bank.
Specifically, Fowler was accused of acting as an intermediary in unlicensed money transfers and, as a result, defrauding financial institutions.
Through Crypto Capital, he allegedly provided suspicious banking services to several crypto exchanges, including Bitfinex, Binance, CEX.io, and QuadrigaCX.
As a result, according to the documents, between February and October 2018, GTS and Crypto Capital allegedly processed about $750 million in crypto transactions, providing unlicensed cryptocurrency companies with illegal access to the US banking system.
Amid the controversial case, Crypto Capital head Ivan Manuel Molina Lee was arrested in 2019 on suspicion of money laundering and involvement with a Colombian drug cartel.
Regardless, in 2020 Fowler pleaded not guilty to all charges and was released on $5 million bail. However, the executive changed his plea to guilty in April last year. Thus, as Fowler’s sentencing approached, Williams concluded:
“Reginald Fowler has committed serious crimes. Only a significant prison term of at least 84 months could reflect such severity, promote law enforcement and provide adequate deterrence.”
In any case, as of September 2022, Fowler has requested a six-month reprieve due to a serious medical condition involving him.
Crypto Capital and the Bitfinex court case
Beyond the Fowler case, we see that Crypto Capital has also been a major player in the court case concerning the Bitfinex exchange‘s failure to disclose the loss of $850 million in customer funds.
Specifically, Tether, Bitfinex and the other entities associated with these two companies were accused of violating the law by carrying out activities to defraud local investors.
According to court documents, the exchange had taken hundreds of millions of dollars from Tether‘s reserves in order to hide losses from investors and mask its inability to process customer withdrawals.
In addition, iFinex was also accused of commingling funds between the two companies, again for the purpose of hiding the huge loss incurred by Bitfinex due to its relationship with the Crypto Capital bank.
At any rate, the case was eventually settled in February 2022, with the companies being ordered to pay $18.5 million in civil penalties and shut down trading operations in New York.
