US: Reginald Fowler faces 7 years in prison over crypto shadow banking activities

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The United States Department of Justice (DOJ) is pushing for at least seven years imprisonment for Reginald Fowler, the ‘crypto shadow banker’ who allegedly offered illegal financial services to Binance, Bitfinex, and others.

Fowler operated Global Trading Solutions, a financial outfit that worked with Crypto Capital Corp to provide financial services to VASPs. U.S. Attorney Damian Williams suspects that Fowler functioned as an unlicensed money transmitter, giving digital asset exchanges a back door into the U.S. banking system.

After an initial ‘not guilty’ plea in 2020, Fowler changed the plea to guilty last April. As his sentencing on April 20 draws closer, Williams wrote to Southern District of New York Judge Andrew Carter, pushing for tough sentencing for the former minority owner of the Minnesota Vikings NFL team.

“The Government requests that the Court impose a sentence of at least 84 months imprisonment. This sentence […] properly reflects the seriousness of Fowler’s criminal conduct, including operating the unlicensed MSB and bank fraud, affords adequate deterrence, as well reflects the personal characteristics that he highlights in his sentencing submission,” wrote the New York U.S. attorney.

Williams noted that for the charges he faces, the applicable sentencing stands between 188 months and 235 months.

The attorney further called for Judge Carter to impose an order of restitution for $53 million to the Alliance of American Football (AAF). AAF was a professional football minor league whose premature demise in 2019 has been blamed on Fowler.

The letter also called for an order of forfeiture for $740 million, the amount Fowler is believed to have laundered for digital asset firms.

One of the biggest links to this criminal syndicate was the $850 million loss Bitfinex suffered and attempted to cover up through Tether, its sister company. While Fowler is staring at seven years in prison, all the two companies got was a measly $18.5 million penalty, an order to shut down New York operations, and a stern “don’t do that again” from regulators.

Fowler’s sentencing was scheduled for last September. However, he filed for a sentencing delay, citing “a serious medical condition that is requiring invasive medical treatments.”

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, 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.