US prosecutors move to detain crypto shadow banking defendant

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Two US prosecutors have filed to detain one of the defendants in a shadow banking case. The defendant, Reginald Fowler was arrested on April 30 in Chandler, Arizona. According to the two prosecutors, Fowler should be detained as he “poses a serious flight risk and presents a risk of continued economic danger.”

In a filing with the Arizona district court, the prosecutors stated that detention is appropriate since Fowler has significant resources and ties to other countries, has taken steps to impede the investigation and there’s evidence of his involvement in other criminal schemes. The nature of his crime also warrants detention, the prosecutors, Elizabeth Strange and Gary Restaino, pointed out.

As we reported on May 1, the New York District Attorney charged Fowler and his partner Ravid Yosef of operating a shadow banking ring for crypto exchanges. The two allegedly opened bank accounts for the exchanges, enabling them to offer fiat services. They failed to obtain money transmitting business license despite handling millions of dollars for the exchanges. Yosef is still at large.

In making their case, the prosecutors claimed that the possible long sentence Fowler faces could serve as an incentive to flee the country. The evidence against him is also quite strong, further making him a big flight risk.

The prosecutors also believe that Fowler has committed many other crimes for which he is yet to be charged. They include attempting to obtain bank loans by presenting fraudulent documents that inflated his worth. Fowler allegedly presented bond certificates worth billions of dollars which were later found to be fraudulent.

In a twist, Fowler is reportedly involved in the $850 million Bitfinex and Tether scandal. A report by The Block alleged that Fowler’s company, Global Trading Solutions was one of the agents linked to Crypto Capital. As we have reported, Crypto Capital is the company alleged to have either stolen or lost $850 million belonging to Bitfinex crypto exchange. The exchange ended up taking some of the cash reserves belonging to Tether, its sister company. The two companies are under investigation by New York’s Attorney General (NYAG).

The report further alleges that the investigation by the NYAG is the genesis of Fowler’s indictment. If found guilty, Fowler could provide big clues on the mysterious Bitfinex and Tether case.