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News that Crypto Capital President Ivan Manuel Molina had been detained by Polish authorities on October 24 sent shockwaves through the industry, and potentially made a few big exchanges nervous. Bitfinex, who already have enough problems on their hands, have now come out to clarify their relationship with the banking outfit.
In a statement posted October 25, Bitfinex lays out their prior relationship with Crypto Capital, and how much they shouldn’t be tied up in Molina’s legal problems. After detailing the current legal problems of Molina and his colleague, Oz Yosef, they note, “As has already been mentioned publicly in court filings, Crypto Capital processed certain funds for and on behalf of Bitfinex for several years.” Yosef was later confirmed to also be indicted by the U.S. Attorney’s Office of the Southern District of New York by CoinDesk.
They go on to explain that they used Crypto Capital’s services specifically due to promises made that “proved to be false.” They list out their perceived faith in the bank’s “integrity, banking expertise, robust compliance programme and financial licences,” and ultimately the ability of the banking outfit to handle Bitfinex transactions.
Finally, they distance themselves from Crypto Capital as hard as they can:
Bitfinex is the victim of a fraud and is making its position clear to the relevant authorities, including those in Poland and the United States. We cannot speak about Crypto Capital’s other clients, but any suggestion that Crypto Capital laundered drug proceeds or any other illicit funds at the behest of Bitfinex or its customers is categorically false.
This is the expected response from Bitfinex, as their relationship with Crypto Capital fell apart long ago. They’ve repeatedly blamed Crypto Capital’s legal problems for their funds being seized by various authorities, causing the exchange to be at an $850 million loss. They are currently working through the courts to discover where those funds may be, and if they have any ability to get them back.
Molina’s accused crimes, including money laundering for the Colombian drug trade, have cranked up the pressure on a number of exchanges tied to Crypto Capital, including Binance, Kraken and BitMEX. As Bitfinex claims, it’s possible none of them actively collaborated in money laundering for drug cartels. It remains a fact though that money Bitfinex claims is rightfully theirs is currently being held up by its relationship to those alleged crimes.
Even if Bitfinex had no knowledge of Crypto Capital’s possible crimes, this is going to be a headache when regulators finally come calling. Working with an incompetent banking outfit, causing the potential loss of $850 million, is already a huge problem. Explaining how they allowed customer funds to get mixed up with the illegal international drug trade and somehow didn’t know about it will be an even bigger one, and not one Bitfinex will easily escape.
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