Federal prosecutors have indicted Oz Yosef, a principal of Crypto Capital Corp., on three counts of bank fraud and conspiracy.
Geoffrey Berman, the U.S. Attorney for the Southern District of New York has charged Yosef, aka Oz Joseph, as part of the investigation into the theft of $880 million from cryptocurrency exchange Bitfinex. That was allegedly masterminded by Arizona businessman Reginald Fowler.
Bitfinex’s parent company, iFinex, has said its money has been seized by governments in Poland, Portugal, the U.K., and U.S. In announcing the arrest of Molina Lee, Polish authorities revealed that they seized about $390 million from Crypto Capital. The company was also accused of laundering money for a Colombian drug cartel.
Like Fowler, Yosef was charged with bank fraud, conspiracy to commit bank fraud, and conspiracy to operate an unlicensed money transmitting business. Yosef’s indictment cites one specific instance—a September 2018 text instructing an unnamed co-conspirator to transmit $10 million from a New York-based bank to one located in the Bahamas.
Yosef and his sister, Ravid Yosef, allegedly assisted Fowler in using Crypto Capital as a money processor after U.S. banks refused to do business with Bitfinex. Bitfinex has said it entrusted Crypto Capital with more than $1 billion. A number of U.S. bank accounts were opened by the trio to allow Bitfinex to send and receive money from U.S. clients. They told the banks that the accounts were for real estate businesses to hide the cryptocurrency connection.
After discovering the loss in late 2018, Bitfinex had to borrow as much as $700 million from its sister company, stablecoin issuer Tether. That in turn led to Tether being sued by New York Attorney General Letitia James for concealing that its USDT cryptocurrency was no longer backed one-to-one by U.S. dollars.
In a statement on October 25, Bitfinex called itself “the victim of a fraud.”
Bitfinex “relied upon… representations from Crypto Capital, including from Molina and Yosef, that proved to be false,” it said. “Among those misrepresentations, Crypto Capital regularly referred to its integrity, banking expertise, robust compliance program, and financial licenses. This was designed to assure us that Crypto Capital was capable of handling Bitfinex’s transactions.”
Bitfinex added that “any suggestion that Crypto Capital laundered drug proceeds or any other illicit funds at the behest of Bitfinex or its customers is categorically false.”
Nor, it said, would the drug money laundering revelations affect its ability to reclaim its funds from Poland or the other three governments.
Crypto Capital reportedly did business with other cryptocurrency exchanges, including Binance, Kraken, and possibly BitMEX (which denies having done business with Crypto Capital). None have reported any losses.