A Micky investigation has uncovered new evidence linking a former NFL football team owner accused of operating a ‘shadow banking’ service for crypto exchanges to Bitfinex and QuadrigaCX.
On Tuesday, The U.S. Attorney’s Office for the Southern District of New York (SDNY) announced that it had arrested and charged former Minnesota Vikings investor Reginald “Reggie” Fowler with bank fraud and operating an unlicensed money transmitting operation.
Bank fraud charges were also made against his co-conspirator, a woman named 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,” said U.S. Attorney Geoffrey S. Berman.
Ties to Bitfinex and QuadrigaCX
According to the indictment, the pair set up multiple bank accounts at HSBC Bank USA and HSBC Securities USA. A total of five accounts are mentioned in the court document. Three are held by Fowler himself and the other two are held by Global Trading Solutions LLC.
Global Trading Solutions LLC is a business entity allegedly set up by Fowler and Yosef and used to help transfer fiat currency to cryptocurrency exchanges. The business address of the company is the same as that of one of Fowler’s previous businesses, Spiral Inc.
The company is also affiliated with the similarly named Global Trade Solutions AG, the parent company of payment processing firm Crypto Capital.
Although all traces of Bitfinex references appear to have been removed from the Crypto Capital website, a copy of the website archived on The Wayback Machine in November 2018 shows Bitfinex proudly listed as one of its client exchanges.
According to its current website, Crypto Capital also provided services to QuadrigaCX. The now-defunct Canadian exchange has been mired in controversy and accusations of theft of customer funds after its owner, Gerald Cotten, passed away suddenly, allegedly taking the private keys to the exchange’s wallets with him.
A Bitfinex customer support representative also appeared to confirm the exchange’s relationship with Crypto Capital in a post on the /r/bitfinex subreddit in September of last year:
“As you may know, our finance is handled by Crypto Capital Corp so they must have ran into some sort of problem with one of their banking partners.”
The most damning piece of publicly available evidence linking Fowler, Yosef, and Global Trading Solutions LLC to Bitfinex, however, comes in the form of a tweet posted by The Block’s Larry Cermack:
Bitfinex is now banking with HSBC through a private account of Global Trading Solutions. Very good fit if you ask me. It's also worth mentioning that all EUR, JPY and GBP deposits are paused but Bitfinex "expects the situation to normalize within a week". Banking issues? pic.twitter.com/1pxQ13NO0m
— Larry Cermak (@lawmaster) October 6, 2018
Note the account number. It is HSBC account number 141000147 – the same account listed among those whose funds have been seized in the Fowler indictment:
Further, Bloomberg reports that interviews conducted over the course of the investigation have “corroborated in part” that companies affiliated with Fowler and Yosef “may have failed to return $851 million to an unnamed client, according to a May 1 court filing.”
A history of dropping the ball
Fowler made headlines in 2005 when he made an offer to buy the Minnesota Vikings for $600 million. The move would have made him the first African American to own an NFL team.
After it was revealed that he did not have the liquid capital necessary to make the purchase himself, Fowler withdrew his bid and brought in partners in order to complete the sale, settling for a minority stake in the team instead.
In 2014, after amassing nearly $60 million in debt and losing control of his companies, Fowler’s lost his stake in the franchise and his name was removed from the team’s ownership group.
Not through with football just yet, Fowler made another bid for gridiron glory. Last year, he invested $25 million in the newly formed Alliance of American Football (AAF), an upstart semi-pro league whose inaugural season began in February.
Sometime around Christmas, withdrawals from Fowlers accounts were “held up”, freezing a significant source of the league’s funds.
Due at least in part to Fowler’s financial setback, the AAF folded on April 2nd, with two weeks left to go in the season. The league has since filed for Chapter 7 bankruptcy.