Is Bitfinex conducting fraud? Poland thinks so

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An account that is possibly associated with cryptocurrency exchange Bitfinex has had its assets frozen at a bank in Skierniewice, Poland, according to local reports. TVP reported the seizure of the account, worth approximately $491,000, comes as regulators believe the account was tied to Colombian drug cartels. However, the seizure is pre-emptive, and there has not yet been conclusive evidence to support the allegations.

The money is said to have been the result of fraud conducted against the Belgian Ministry of Foreign Affairs and comes from construction of an embassy being built in the Democratic Republic of Congo. The account is only one of several belonging to two companies that are currently under investigation by Polish prosecutors. Combined, the accounts reportedly hold as much as $371 million.

One of the companies is reportedly owned by an individual of Panamanian and Canadian descent, and is registered in Pruszków, Poland. The other company is allegedly run by a man who holds dual citizenship in both Panama and Colombia.

According to the investigation, documents posted on the Internet allegedly have Bitfinex sending customers to an account at the Cooperative Bank in Skierniewice. A Bitfinex user was supposedly interrogated by Polish police last week and testified that he had been a witness in the case of “Crypto sp z o.o” who was sent money from Bitfinex after the entity’s accounts had been blocked.

A report that was published on Skierniewice’s Nasze miasto (our city) website alleged that “Crypto zp z o.o,” which is owned by Crypto Capital Corp., is connected to drug networks and that criminals could have used the bank accounts to launder fiat through cryptocurrency. There have been no charges yet, but Polish prosecutors are currently working with Interpol and Europol to determine if there is enough evidence to arrest the individuals.

This isn’t the first time that Bitfinex has found itself in hot water. The cryptocurrency exchange, along with its sister company Tether, were subpoenaed by U.S. regulators in December for reasons that were not published. Wells Fargo & Co. dropped out as a correspondent bank for Bitfinex in 2017, which resulted in the exchange suing the financial clearing house. That lawsuit was subsequently dropped unceremoniously by Bitfinex.

Tether has come under fire for concerns that it has been operating a fractional reserve. Claims have been circulating the exchange covers its reserve deficit not through its own reserves but, rather, through Bitfinex. When Tether severed relations with an independent auditor in January, those concerns were reinforced.