Man use crypto currency app on a smartphone,trading exchange,digital business,

Is next on the US exchange hit list? may be the odds-on favorite as the next digital asset exchange to face the wrath of U.S. authorities looking to rein in crypto excesses.

On March 28, Finance Forward reported that Germany’s Federal Financial Supervisory Authority (Bafin) was investigating the Singapore-based for failing to deliver on its promise to secure a formal partnership with local brokerage CM-Equity.

Last summer, Finance Forward first reported that—which holds a Malta-issued electronic money institution (EMI) license issued to Foris DAX MT Limited—was promoting CM-Equity as its German partner (a requirement for marketing to German customers). Around one million Germans had downloaded the app at that time.

The Bafin-approved CM-Equity was supposed to handle Know Your Customer (KYC) requirements and other pesky regulatory responsibilities for but CM-Equity reportedly never received any customer information from This didn’t stop from listing CM-Equity as its partner and informing German digital currency exchange customers that, for legal purposes, they were considered customers of CM-Equity. The latter firm was reportedly unaware of this situation until Finance Forward contacted them.

Following last summer’s report, began advertising in Germany for a ‘Regulatory Compliance Manager,’ whose responsibilities would include “obtaining the relevant licenses for conducting regulated business in Germany.”

Last week’s report claimed the two parties had failed to move forward with their partnership and had scrubbed any mention of CM-Equity from its site. The Bafin registration of Foris DAX MT Limited expired last August. However, the now 1.3 million Germans who downloaded the app can reportedly still access exchange services and products, just not in the German language.

While Bafin responded to last summer’s report by saying it was “checking the facts” of the situation, the regulator now says it’s ‘investigating,’ a verbal switch that Fast Forward deemed significant.

Banking woes’s European presence got more complicated in January after Lithuanian authorities ordered local payment processor Transactive Systems AB to end relationships with clients involved in “virtual currencies.” The halt followed a Bank of Lithuania inspection that uncovered “significant violations and shortcomings” of anti-money laundering laws.

Bloomberg subsequently reported that Transactive was launched with the help of senior executives at PacNet Services Ltd, a Vancouver-based processor that was cut off from the U.S. financial system in 2016. The Treasury Department’s Office of Foreign Assets Control (OFAC) concluded that PacNet was facilitating money laundering by the operators of countless ‘mass mail’ fraud scams preying on U.S. senior citizens.

In 2019, the U.S. Department of Justice hit four of PacNet’s senior managers with fraud and money laundering charges. But as PacNet wound down, Transactive was born, with former PacNet execs taking roles in Transactive’s compliance, marketing, technology and customer service departments.

In 2018, Scott Roix, a Florida resident who was one of Transactive’s early investors, pleaded guilty to felony conspiracy charges for his role in a $1 billion health care fraud scheme. Bloomberg reported that some of Transactive’s banking partners cut ties with the company following Roix’s conviction, but Transactive said it cut ties with Roix and denied that any of its seed funding came from Roix’s fraudulent activities.

In 2019, four more PacNet execs were charged with fraud and money laundering, including two who’d ended up working at Transactive. Both charges remain active, and while one exec (Renee Frappier) claimed to have quit Transactive before being charged, the other (Miles Kelly) was until recently still acting in his anti-money laundering capacity (you can’t make this stuff up) at Transactive.

Besides, Transactive’s other crypto clients included digital asset lending platform Nexo, whose offices were raided by Bulgarian authorities in January. The raids resulted in money laundering, tax evasion and fraud charges against four individuals suspected of involvement in the scheme since “the beginning of 2018.”

Another Transactive crypto client was the Dominica-based lender Migom Bank, whose principal investors included Mikhail Syroejine, a Russian national who pled guilty to U.S. money laundering charges in 1996. Migom reportedly ‘severed’ its Transactive ties last year and bought out “most of” Syroejine’s shares.

It’s unclear whether Binance was a Transactive client, although it stands to reason. Wherever there’s regulatory dodginess, Binance is rarely far behind.

When it rains…

Lithuania’s actions against Transactive temporarily left without the ability to transact in Euros but the exchange’s U.K. users also reported difficulty moving sterling on/off the exchange. (Transactive is licensed by the U.K.’s Financial Conduct Authority but uses BCB Payments for its U.K. banking.)’s woes were likely exacerbated by Lithuania’s reported freezing of funds in Transactive’s crypto-related accounts, resulting in customers pleading for help in online forums. The exchange also began imposing stiff new fees on withdrawals, which, combined with yet another round of major layoffs, stoked fears that all was not well with

In February, the Bank of Lithuania announced that it was investigating UAB PayrNet, a subsidiary of banking platform Railsr, on suspicions of having “grossly and systematically” violated money-laundering laws. PayrNet was the issuer of’s Visa debit cards until last December, when the exchange announced it was switching providers to the Malta-based Foris MT Limited.’s ‘Midnight Blue’ Visa debit card comes courtesy of Metropolitan Commercial Bank (MCB), although MCB announced in January that it would “fully exit the crypto-asset related vertical” before the year is through. MCB clarified that this pivot wouldn’t impact “MCB’s service to customers that do not have crypto-asset related activity as a principal line of business.”

MCB included in its list of ‘payment clients’ when the bank released its Q322 investor presentation, but was no longer there when MCB’s Q422 presentation was released.’s ‘How to deposit USD via ACH direct deposit’ page still cites MCB as handling these transactions but for how much longer is anyone’s guess. And with most traditional banks now ditching crypto clients like yesterday’s skinny jeans, where will find new USD payment rails is an even harder question.

Fat fingers, thin reserves

Quite apart from its banking relationships,’s internal operations have often sparked controversy. In May 2021, the exchange accidentally sent US$7.2 million worth of tokens to a customer who’d requested a withdrawal of around $68. That goof somehow wasn’t discovered until December 2021 and the company has yet to claw back the entirety of the errant funds.

Last October, questions rose after 320,000 ETH tokens were mistakenly sent from to the exchange. While the tokens were returned to the following week, CEO Kris Marszalek’s belated public admission that this transfer was a fat-fingered booboo didn’t exactly inspire confidence, particularly coming hot on the heels of the bankruptcy filing of rival exchange FTX.

FTX’s collapse prompted many exchanges to produce threadbare ‘proof of reserves’ reports that didn’t always offer much in the way of reassurance. In’s case, the revelation that nearly 20% of its roughly $3 billion in wallet reserves in mid-November were in the Shiba Inu meme coin raised eyebrows, but the company wrote it off as reflecting their customers’ interest.

Not all customers proved willing to dismiss their concerns, leading to a mass-hammering of ‘withdrawal’ buttons. Some observers claim that appeared to have been backstopped by rival exchange Binance, whose founder Changpeng ‘CZ’ Zhao was at the time keen to take on the mantle of crypto savior so recently shed by FTX’s Sam Bankman-Fried.

Numerous online sleuths claim to have uncovered other connections linking to Binance, both in terms of their executive ranks and even some digital wallets that were opened by Binance but now utilized by

However, after withdrew hundreds of millions of dollars’ worth of digital assets from Binance ahead of its proof of reserves, CZ declared (in a since deleted tweet): “If an exchange have [sic] to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away.” So if there was a CZ-Marszalek bromance, it didn’t last.

Given Binance’s mounting legal woes, even the perception of ties to CZ could prove dangerous. But for an exchange seemingly teetering on the brink like—and Marszalek having his own history of bad business practices—this kind of connection could prove fatal.

Fortune favors the solvent

Not so long ago, was spending massive amounts of money to promote its services, including $100 million on its high-profile ‘Fortune favors the brave’ Super Bowl commercial featuring Matt Damon. Damon recently told the Associated Press that his motivation for doing the spot was because his non-profit had “a down year.” Damon says he “gave my whole salary to charity” while “gave $1 million to … just on their own.” also struck a $700 million naming rights deal for the Staples Center in Los Angeles., home of the NBA’s Lakers. Last November, in the wake of FTX’s collapse, Marszalek defended the deal, saying that the annual payment on the 20-year deal “amounts to around 10% of our revenue.”

But with increasingly unable to ensure an influx of new money—due to decreased retail interest in digital assets and the difficulty of getting fiat onto the exchange—that 10% of annual revenue could soon prove a deal-breaker.

Last August, backed out of a $495 million deal to sponsor the UEFA Champions League, a decision reportedly based not only on its suddenly prohibitive cost but also a more restrictive European regulatory environment.

Things are also getting rough stateside. This year alone, U.S. authorities have targeted exchanges like Binance, Coinbase (NASDAQ: COIN), Kraken and Nexo. Bittrex, which was fined $29.3 million last year for lax anti-money laundering practices, announced last week that it will shutter its U.S. operations this month due to the “current U.S. regulatory and economic environment” making the market no longer “economically viable.”’s attention-grabbing promotions, its association with sketchy payment processors, a history of promoting high yields on the kind of staking products that got Kraken into so much trouble and—as the German situation shows—a willingness to treat regulatory compliance as optional… It all could prove catnip for U.S. authorities, who don’t appear to need much encouragement to file charges these days. If you’ve got a crypto exchange dead pool going, you could do worse.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance,, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.