Bitfinex has taken legal action in effort to solidify ownership claims to the $880 million in user funds that have vanished. The missing funds are a result of misconduct by Crypto Capital, a company that provided banking services to many well-known digital currency exchanges including Binance, Kraken, and BitMEX.
What did Bitfinex do?
Recently, iFinex Inc., Bitfinex’s parent company, applied for subpoenas in Arizona, Colorado, and Georgia, requesting the help of federal courts to help depose the banks in these states that potentially held some of their now missing funds. Among these banks are ABT & Trust (Arizona), Bank of Colorado, and SunTrust Bank Georgia—banks that Crypto Capital was known to hold funds in.
iFinex hopes that the records that the banks will be forced to produce will show how money moved from Crypto Capital accounts to other locations, hopefully giving them insight into how $880 million of their money went missing. It is important to note that iFinex needed to subpoena the banks to compel them to produce any of their records.
So far, a federal judge has granted iFinex’s application for their subpoena in Arizona, and a magistrate judge in Georgia has asked iFinex to file a corporate disclosure before they take any further steps.
What happened to Crypto Capital?
Crypto Capital is in a lot of hot water. It is not clear whether the company is still operating, but it is clear that they were tied up in criminal activity. Back in October 2019, two Crypto Capital employees with principal roles were arrested.
Crypto Capital President Ivan Manuel Molina Lee was arrested by Polish authorities on charges of being a member of an international drug cartel and laundering money in Poland. According to Polish Authorities, Lee laundered money from Colombian drug cartels through a digital currency exchange.
And just a few days later, Crypto Capital Principal, Oz Yosef was indicted on three criminal counts—conspiracy to commit bank fraud, bank fraud, and conspiracy to operate an unlicensed money transmitting business—by the U.S. Attorney’s Office of the Southern District of New York.
What happens next?
What happens next really depends on the federal judges’ decision in regards to the iFinex applications to subpoena. In a perfect world, the applications are granted, and the records produced can trace crypto capitals money movements, some of which pertain to Bitfinex’s missing funds.
Worst case scenario, the remaining applications aren’t granted, or they are, and the records produced do not show what iFinex was hoping to see and they find themselves back at square one, crying that they are a victim of fraud but with no real actions or resolution to follow or even prove that this is the case.
At the end of the day, this is why you should never work with shady companies or any business with questionable business practices and ethics.
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