By Bitfinex had been involved in a lawsuit with the New York Attorney General’s office over $850 million cover-up with the help of its subsidiary Tether, the company behind the popular stablecoin USDT. At that time Bitfinex covered up an $850 million loss which was held by one of their third-party payment processors, Crypto Capital. The exchange allegedly filled the gaps in its books by borrowing $900 million from its sister company Tether.
Both the companies share some key executives and ownership, they claim that the $900 million loans were negotiated on independent terms and were not a cover-up. All of this was not disclosed to the investors until the NY attorney general accused Bitfinex and its affiliate of covering up the losses.
Now, Bitfinex has reportedly applied for a Subpoena to U.S court against a former banking executive of a trust company that it believes can help in its efforts to recover the $850 million frozen funds. The filing was submitted on October 18 to a California court to obtain the permission to take the deposition testimony of Rondell “Rhon” Clyde Monroe, a former vice president of TCA Bancorp. The filing also seeks to obtain documentation of Monroe’s communication with Crypto Capital staffers.
Bitfinex claims that Crypto Capital “has used one or more accounts held at TCA Bancorp to facilitate the transfer of funds” belonging to itself and believes Monroe has information and documents vital to their claims to over $850 million. This is all part of on-going proceedings where the exchange aims to recover $880 million of its funds held at its payment processor Crypto Capital which they claimed to be frozen by multiple government agencies.
Bitfinex said that in August 2018, Crypto Capital informed them that about $500 million of its funds in both Poland and Portugal were being “held up” by authorities in the two countries. The exchange added that after being pressured to provide more information regarding the frozen banking accounts, Crypto Capital provided a reference letter signed by Monroe from TCA.
The letter presented the custody of a little over $300 million of Bitfinex’s funds at TCA on behalf of a customer called Global Trade Solutions AG (GTS), doing business as “Crypto Capital.”
Bitfinex is now applying to take deposition testimony from Monroe and is also trying to recover the documents of his communication with Ozzie Yosef, a principle at Crypto Capital; Yosef’s sister Ravid Yosef; Reginald Dennis Fowler, a sole shareholder of GTS; as well as Fowler’s son Trent Dennis Fowler, who is said to be the registered holder for at least one account used by Crypto Capital to receive deposits from Bitfinex customers.
Reginald Fowler and Ravid Yosef have been indicated by the U.S Department of Justice for bank fraud charges in connection to a system for depositing funds to cryptocurrency exchanges.
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