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Promising News: US Authorities Charge Illegal Money Transmitting Business And Arrest Suspect

U.S. States Attorney for the Southern District of New York, the Federal Bureau of Investigation (FBI), and Internal Revenue Service (IRS) announced the arrest of the US citizen Reginald Fowler on charges of bank fraud and operating an unlicensed money transmitting business. Bank fraud charges were also unsealed against his Israeli co-conspirator Ravid Yosef, who remains at large.

Reginald Fowler and Ravid Yosef allegedly ran a shadow bank that processed hundreds of millions of dollars of unregulated transactions on behalf of numerous cryptocurrency exchanges.  Their organization allegedly skirted the anti-money laundering safeguards required of licensed institutions that ensure the U.S. financial system is not used for criminal purposes, and did so through lies and deceit.

U.S. Attorney Geoffrey S. Berman (Press release April 30, 2019)

False Pretenses

Fowler and Yosef, who worked for several related companies that provided fiat-currency banking services to various cryptocurrency exchanges (the “Crypto Companies”), allegedly participated in a conspiracy in which Fowler made numerous false and misleading statements to banks when opening bank accounts that were used to receive deposits from individuals purchasing cryptocurrencies. Fowler and Yosef falsified electronic wire payment instructions to conceal the true nature of a voluminous cryptocurrency exchange business. 

The defendants, willfully and knowingly, did execute and attempt to execute a scheme and artifice to obtain any of the moneys, funds, credits, assets, securities and other property owned by, and under the custody and control of a financial institution, by means of false and fraudulent pretenses, representations and promises […] Fowler opened numerous U.S.-based business bank accounts at several banks, and in opening these bank accounts Fowler and Yosef falsely represented to those banks that the accounts will be primarily used for real estate investment transactions even though Fowler and Yosef knew that the accounts would be used […] to transmit funds on behalf of an unlicensed money transmitting business related to the operation of cryptocurrency exchanges.

Indictment US versus Fowler and Yosef

Illegal Broker Schemes And PSPs

Following the indictment against Fowler and Yosef, many of the Payment Services Providers (PSPs) and money transmitting businesses around the illegal and fraudulent broker schemes such as Option888, XTraderFX, SafeMarkets, BlueTrading or StoxMarket – just to name a few – must also expect respective indictments.

The operators of these illegal binary options and forex platforms have used these illegal payment service providers and money transmitters. They willfully and knowingly made false statements to the banks to open bank accounts and transmit money to illegal brokers. Hence, those PSPs and money transmitters have been part of the international money laundering scheme and facilitated investment fraud.

The German IntellEstate Bau GmbH, for example, pretended to be a construction and real estate company but were actually part of the money laundering of Gal Barak‘s illegal brokers schemes such as XTraderFX (read FinTelegram report here).

XTraderFX and Intellestate Bau
Unlicensed payment services provider IntellEstate Bau and XTraderFX

The prosecution in the US also supports the FinTelegram view that these illegal PSPs are to be regarded as contributors and co-conspirators and consequently have to be held accountable accordingly. As fraud facilitators, they should also be charged and brought to justice. Moreover, they are liable to pay damages to the defrauded investors.

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FinTelegram Ltd 2019