The DOJ from the Southern District of New York, unsealed a grand jury superseding indictment against two people today for allegedly providing payment processing services to digital currency exchanges without being licensed and under circumstances where they allegedly lied to obtain bank accounts. They are charged with bank fraud.
According to the indictment, Reginald Fowler, who is from the US, and Ravid Yosef, who is from Israel, obtained US bank accounts over an eight month period allegedly falsely representing that such bank accounts would be used for real estate when in fact they were allegedly used to provide financial services to digital currency exchanges who could not obtain bank accounts, typically due to financial crime risks.
The defendant’s business was not a licenced money transmission business but is alleged to have operated as such and to have processed millions of dollars on behalf of digital currency exchanges. Part of the activity allegedly involved the misinformation of wiring instructions in order to facilitate the movement of funds over the Swift network. The defendants allegedly skirted anti-money laundering law in their banking activities.
The DoJ statement says that the two defendant also operated digital currency companies but it did not name those companies. It characterized the payment processing services as “shadow banking.” In Asia, shadow banking has a different meaning – it means exiting money from China outside the banking system (to avoid SAFE) using natural persons (as opposed to a payment processor or other little FinTech).
The indictment includes an action for forfeiture of funds seized at HSBC Bank and HSBC Securities in the US held by a company called Global Trading Solutions LLC, which may be related to Global Trading Solutions AG, which the Swiss government has listed as a corporation in that country. Also forfeited are funds seized at HSBC Bank and HSBC Securities held in the name of the defendant Fowler.
The similarly-named entity, Global Trading Solutions AG, which is not named in this indictment, is the apparent parent company of a payment processor which says it is based in Panama, of several digital currency exchanges, including one called Bitfinex which the AG for New York has sought an ex parte order for document production in connection therewith.