U.S. authorities brought charges today in connection with an alleged “shadow bank” scheme that, they say, helped process hundreds of millions of dollars worth of transactions for cryptocurrency exchanges.
The U.S. Attorney’s Office for the Southern District of New York charged Reginald Fowler, 60, of Arizona, with bank fraud and operating an unlicensed money transmitting business, and brought unsealed bank fraud charges against an Israeli woman, Ravid Yosef. Fowler has been arrested, but Yosef remains at large.
According to the allegations, which have not been proven, Fowler and Yosef worked for several companies that provided banking services to various crypto exchanges.
Fowler allegedly “made numerous false and misleading statements to banks” as a way to open bank accounts to receive deposits from crypto exchanges. According to the indictment, he claimed that the accounts were to be used for real estate transactions.
Instead, hundreds of millions of dollars flowed through those accounts from banks across the world on behalf of crypto exchanges, the indictment charges. The banks and exchanges involved are not identified in the indictment.
The pair are also accused of falsifying “electronic wire payment instructions to conceal the true nature of a voluminous cryptocurrency exchange business.”
“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,” said U.S. attorney, Geoffrey Berman.
“Their organization allegedly skirted the anti-money laundering safeguards required of licensed institutions that ensure the U.S. financial system is not used for criminal purposes, and did so through lies and deceit,” he added.