A key person in Bitfinex and Tether’s “missing” $880 million is now sitting in a Polish jail and is getting grilled by investigators.
Ivan Manuel Molina Lee, president of Crypto Capital Corp., was arrested in Greece earlier this week at the request of the Wroclaw’s prosecutor’s office using a European Arrest Warrant. Prosecutors allege he is a member of an “international drug cartel” and accuse him of money laundering. According to Polish news site RMF24, Molina Lee was flown to Warsaw Tuesday and is to be interrogated Friday by the country’s Central Bureau of Investigation in Wroclaw.
This is related to the April 2018 seizure by Polish authorities of about €400 million held at Bank Spoldzielczy in Skierniewice, Poland. Crypto Capital used that account for Bitfinex’s euro deposits but according to prosecutors, that same account was used to launder money for a Colombian drug cartel.
This was the largest seizure in post-World War II Polish history and involved cooperation with Europol, Interpol, and the U.S. Drug Enforcement Agency (DEA).
At the time of the seizure in 2018, Bitfinex adamantly denied any connection with their account and the money seized. “Bitfinex can confirm that it is aware of the current allegations that have been reported by Polish media over the past several hours,” the company said in a statement to the website Finance Magnates. “Bitfinex believes that these allegations are untrue and Bitfinex customers and operations are unaffected by false rumors.”
Except the rumors turned out to be painfully true.
As Bitfinex and Tether’s parent company iFinex claimed in documents filed last week with the U.S. District Court for the Central District of California in Los Angeles:
“In or about late August 2018, however, Crypto Capital began representing that approximately $500 million of Applicant’s funds in both Poland and Portugal were being ‘held up’ by regulators in both countries. From then through November 2018, one of Crypto Capital’s principals, Oz ‘Joseph,’ repeatedly reassured Applicant that its funds held in Poland and Portugal were on the verge of being released and that Crypto Capital was working diligently with local authorities to secure their release.”
A year and a half later, those funds are still being held up and now Crypto Capital’s head honcho is on the wrong side of iron bars.
Molina Lee, a Canadian citizen living in Panama, is one of the many questionable characters that seem to pop up in the world’s most-used cryptocurrency—Tether—and Bitfinex, one of the world’s largest crypto exchanges. Government disclosure requirements run counter to the culture of privacy and secrecy that drives the cryptocurrency markets. With iFinex’s desperation get banking, it seems inevitable that the firm would get mixed up with the sort of shady figures experienced in evading rules.
In 2017, Bitfinex and Tether were struggling to find a bank willing to take their U.S. dollar deposits. Wells Fargo cut off their four banks in Taiwan from doing business with the crypto firms They ultimately found a place in San Juan, Puerto Rico, at an outfit called Noble Bank that ended up collapsing a year ago.
However along the way, Bitfinex and Tether wanted the help of Molina Lee’s Crypto Capital to get accounts that could process fiat currency deposits and withdrawals—notably, for the U.S. dollar. As a stablecoin, Tether claimed at the time to have one dollar in a bank account backing up each token they issued (they have since admitted that’s not the case).
Crypto Capital seemed to be one of the few avenues available for them. Molina Lee’s firm was used by Kraken and Binance. But its client list also included the now disgracefully shuttered QuadrigaCX and sex traffic site Backpage. And while BitMEX insisted to news outlet Decrypt that it had “never conducted any business with the platform,” Crypto Capital appeared comfortable enough to list the exchange as a client for more than two years on its website.
In other words, Crypto Capital wasn’t a fly-by-night operation but one familiar to the biggest crypto exchanges out there. And with Bitfinex and Tether in a jam, it was a possible way out.
“In late 2014, Crypto Capital agreed to act as a payment processor for the Bitfinex exchange, although the large majority of processing activity did not commence until 2017,” stated iFinex in the documents filed last week at the LA courthouse.
At that time, accounts in Crypto Capital’s parent company’s name, Global Trading Solution, were established at HSBC.
Except those accounts were set up for them by Arizona businessman and former Minnesota Vikings co-owner Reginald Fowler. U.S. prosecutors contend that Fowler and Ravid Yosef told HSBC the accounts were for his real estate operations and not for processing dollars for crypto trades. That’s because banks tend to shun such accounts due to the high regulatory requirements, such as anti-money laundering (AML) and “know your customer” (KYC) checks.
Ravid Yosef is the sister of Oz “Joseph,” the Crypto Capital principal who allegedly told iFinex Poland and Portugal would release their funds.
“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 this past May.
That’s not the worst of it for iFinex because they claim Fowler squirreled away hundreds of millions of dollars of their money.
“G.T.S. Resources Limited, a United Kingdom entity that, according to Crypto Capital, is currently holding more than $304,000,000 of iFinex’s funds with TCA Investment Bancorp & Trust,” iFinex claimed in their filing on October 18. “G.T.S. Resources Limited is also wholly owned by Mr. Fowler. In December 2018—after iFinex learned of Mr. Fowler’s involvement with Crypto Capital—Mr. Fowler changed the corporate name of the entity to Spiral Global Development Limited.”
The point of their filing was to have the courts force Rondell “Rhon” Clyde Monroe, a former vice president at TCA, to turn over documents related to Crypto Capital, Reggie Fowler, and what’s now Spiral Global Development.
Yet with Molina Lee now sitting in a cell, perhaps more information will come out.
Interestingly, the price of Bitcoin plunged $550—or about 7%—in a matter of minutes on Tuesday as Molina Lee was being shipped off to Poland from Greece. The cause was over $200 million in XBT/USD perpetual swap contracts being liquidated on the BitMEX exchange.
That’s the same exchange that said it never had anything to do with Crypto Capital.