Bitfinex Banking Partner Put Under Swiss Regulatory Supervision

The action by the Financial Market Supervisory Authority (FINMA) seems to have been prompted by the firm’s association with an alleged scam worth $850 million involving cryptocurrency exchange Bitfinex and its sister organization Tether Ltd. Global Trade Solutions (GTS) is the parent company of several subsidiaries including Crypto Capital, a payments processing firm with a direct connection to Bitfinex. Additionally, it may also be linked to Global Trading Solutions LLC, another financial services provider that came under the scanner of the US government earlier this year.

Layers of Shady Deals

The alleged scam that eventually led to FINMA’s action against GTS AG is as elaborate as money laundering schemes usually get. It involves layers and layers of shadow banks and proxy companies set up to evade suspicion. Troubles started brewing for GTS during an investigation against an alleged scam that involved the perpetrators using multiple bank accounts to transfer money to a number of cryptocurrency exchanges, some of them unnamed. Two suspects — Reginald Fowler of Arizona and Ravid Yosef, an Israeli national — were charged with bank fraud and conspiracy to commit bank fraud, earlier in April 2019. This is where things become interesting in the context of this story. Apparently, two of the bank accounts named by the U.S. Attorney’s Office for the Southern District of New York in the court documents were registered under the name Global Trading Solutions LLC (owned by Reginald Fowler himself). Now, the court documents do not explicitly state that Global Trading Solutions is related to Global Trade Solutions AG. However, follow-up journalistic investigations show that the two entities are indeed related. Besides, even if we ignore any direct link between Global Trade Solutions AG and Global Trading Solutions LLC for a moment, the latter is still believed to have direct ties with Crypto Capital, which in turn, names the Swiss financial services provider as its parent company. Under these circumstances, it is hardly a surprise that the FINMA has decided to tighten the noose on Global Trade AG.

The Bitfinex Connection

There is documented evidence that Global Trading Solutions has offered services to Bitfinex in the past.

Bitfinex is now banking with HSBC through a private account of Global Trading Solutions. Very good fit if you ask me. It's also worth mentioning that all EUR, JPY and GBP deposits are paused but Bitfinex "expects the situation to normalize within a week". Banking issues? pic.twitter.com/1pxQ13NO0m

— Larry Cermak (@lawmaster) October 6, 2018

The same can be said about Crypto Capital, which touts itself as a one-stop-platform that enables investors and traders to “deposit and withdraw fiat funds instantly to any crypto exchange around the world.” It has established links with several cryptocurrencies including Bitfinex, Kraken, and QuadrigaCX (now-defunct), among others. Basically, any cryptocurrency exchange that is denied access to banking services on regulatory grounds turns to Crypto Capital and other similar entities to use them as intermediaries for transferring funds to their customers. Crypto Capital is currently under scrutiny for its role in the infamous $850 million shady transactions allegedly perpetrated by Bitfinex and Tether Ltd. For those out of the loop, Tether Limited is accused of colluding with Bitfinex to cover up an $850 million loss while misleading investors in the state of New York. The lawyers representing both Bitfinex and Tether had previously argued that the fund in question wasn’t actually lost, but was seized from the accounts of Crypto Capital by the governments of the US, Portugal, and Poland. Do you think this new development will somehow stir more trouble for Bitfinex and Tether? Share your thoughts in the comments below. 

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