The dominoes have started to fall for cryptocurrency exchanges choosing to operate in the shadows. Polish news site wPolityce.pl reported Crypto Capital President Ivan Manuel Molina was arrested on October 24 in connection to money laundering charges, causing a huge potential problem for Bitfinex, Binance, and BitMEX.
Crypto Capital has previously been established as the banking partner for many of the biggest exchanges in the world, having been named as Bitfinex’s banking partner after losing their Wells Fargo accounts, but also being tied to failed exchange QuadrigaCX as well as Binance, Kraken and BitMEX. Although they’ve helped these exchanges with their money, they’ve also been a consistent source of headaches, allegedly being part of why Bitfinex had $850 million go missing.
A representative for Kraken clarified to CoinGeek that the firm has not worked with Crypto Capital since 2017.
The charges against Molina now help fill out the story of what those exchanges might have been doing by partnering with Crypto Capital. Another Polish outlet, RMF24, notes Molina is accused of helping them with “money laundering Colombian drug cartels through the cryptocurrency exchange.”
The hundreds of millions of dollars entrusted to the banking outfit, some of which Bitfinex probably hoped they would get back, has apparently also been seized by Polish authorities. The message is becoming clear: exchanges and their banking partners that run afoul of the law have everything to lose.
The next question will be, what does this mean for the exchanges? Bitfinex is most notably already under investigation for the $850 million loss, and what they might have done with their sister company Tether to cover it up, allegedly printing hundreds of millions to cover their tracks.
They’ve recently tried to force Crypto Capital to reveal the location of their accounts, but with $350 million seized for money laundering, it’s unlikely there’s much left there. Add heightening regulatory scrutiny to the mix, and Bitfinex is sees bad times ahead.
For the other exchanges tied to Crypto Capital, it’s just a matter of time until they have nowhere left to hide. Binance and Kraken are both notable for attempting to evade regulation in the past, but with Columbian drugs now part of the story, they will have a harder time hiding from the truth. What we’re they using Crypto Capital for, and how long until they are defending themselves in a court of law? If Molina starts cooperating with Polish prosecutors, that day could be very soon.
Editor’s note: This article has been updated to add Kraken’s statement.
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