The duo has been accused of being the thinktank and perpetrators of an elaborate scheme under which, according to the U.S. Attorney’s Office of New York, they were running “a shadow bank that processed hundreds of millions of dollars of unregulated transactions on behalf of numerous cryptocurrency exchanges.”
In other words, the accused were running a bank service business from February to October last year owing to which they opened and closed several bank accounts at various well known financial institutions. These accounts were then used to transfer money to various crypto exchanges unlawfully.
According to the prosecutors, the duo used the name Global Trading Solutions LLC, which is also under investigation in another case involving Bitfinex, to open two accounts. Although there have been no official announcements from the authorities investigating this case, media reports suggest a connection between Global Trading Solutions LLC and the current Bitfinex case for which the latter is under scrutiny.
In fact, according to journalist Amy Castor, Global Trade Solutions which is being tied to the Global Trading Solutions LLC that Fowler and Yosef used for their endeavors, is finding it hard to avail financial services in the States and even in Europe due to the numerous AML controversies it has been a part of.
The Investigation Against Fowler and Yosef
The investigation that led to the arrest of Reginald Fowler included a team of FBI agents from its New York Money Laundering Investigations Squad and the U.S. Internal Revenue Service (IRS).
According to Attorney Geoffrey Berman, the pair have violated AML regulations that licensed institutions are mandated to abide by to ensure that the American financial system does not become a medium for fraud and deceit. Fowler who has been arrested and is in custody is now facing charges for planning and committing bank fraud and running an illegal bank service. Meanwhile, Yosef is on the run.