Bank of New York Mellon played a big role in the OneCoin Ponzi scheme, the latest filing by investors in the $4 billion scam claimed. The investors accused the bank of processing hundreds of millions of dollars despite being fully aware that they originated from OneCoin.
In their class action lawsuit filed in the Southern District of New York, the investors claim that BNY Mellon processed several transactions for Mark Scott, the lawyer alleged to have led the money laundering efforts for the cryptocurrency scam.
The filing follows a recent exposé by BuzzFeed that has revealed thousands of suspicious activity reports (SARs) filed by banks with FinCEN. Banks file SARs when their compliance teams flag a transaction they dub suspicious or out of the ordinary. Known as FinCEN Files, the exposé contained previously unseen SARs filed by some of the largest U.S banks, including BNY Mellon, from 2011 to 2017.
As per the filing, Scott began making fraudulent transactions involving OneCoin in August 2016 with BNY Mellon. The plaintiffs note on their filing that “despite the fact that BNY Mellon’s December 2016 internal “investigation” concluding the transfer involved OneCoin funds and that OneCoin appeared to be a “Ponzi/pyramid scheme”, BNY Mellon did not submit a Suspicious Activity Report (SAR) related to the transaction until February 2017.”
In the February SAR, BNY Mellon allegedly claimed that Scott had received wires from shell entities associated with OneCoin totaling approximately $137.6 million. In a separate incident report, the bank identified 275 wires, totaling approximately $222 million that were made by entities affiliated with OneCoin.
“Despite being fully aware that transactions involving funds originating from OneCoin should have been flagged and halted […] BNY Mellon opted to merely include a filter that would flag future transactions involving only IMS,” the plaintiffs stated.
The plaintiffs accuse BNY Mellon of commercial bad faith for turning a blind eye to clear red flags involving the OneCoin transactions. They also want the court to declare the bank liable for aiding and abetting OneCoin’s fraud.
The New York-based bank has declined from issuing a statement on its involvement and compliance lapses. “We take our role in protecting the integrity of the global financial system seriously,” a spokesperson for the bank stated.
The emergence of the FinCEN files has incriminated BNY Mellon in the OneCoin scam as they prove it could, and should have acted sooner, David Silver believes. Silver is the founder of Silver Miller LLP, the law firm representing the plaintiffs.
Silver was quoted by CoinDesk saying, “The allegations in the lawsuit expose information that Bank of New York knew about the highly-suspicious nature of those OneCoin transactions but failed to act accordingly.”
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