In recent months, an important development has rattled the crypto world. Last month, the U.S. Secret Service seized multiple corporate bank accounts from Deltec Bank, a Bahamian bank with well-known connections to crypto-industry firms. Over $58 million rested in these accounts which are now under US control following accusations that they played a part in organized, international money laundering syndicates allegedly linked to crypto investment and wire fraud scams.
The accounts, hosted with Mitsubushi Bank UFJ Trust in New York, were opened by Deltec on behalf of its corporate clients. These clients were flagged as running suspicious transactions that were linked to shell firms suspected of international fraud by creating counterfeit crypto websites. These fraudulent sites would encourage unsuspecting victims to deposit their valuable assets or cash, promising sizeable returns.
Mitsubushi Bank raised the high-profile red flag on Deltec’s accounts with two main culprits – Axis DigitalLimited and GTAL – as their business details could not be provided by Deltec. As per the affidavit filed in Virginia’s Eastern District Court, at least 74 of these shell companies were caught up in this intricate web of deception with ties to the Bahamas.
On the victims’ end, the fake crypto websites would display an increase in the supposed investment account balance, prompting further deposits to these illusionary accounts. Withdrawals, however, remained a no-go.
Interestingly, the modus operandi of the shell companies allegedly comprised wire transfer of fraudulent proceeds to the Deltec’s custodial accounts, shifting further to other accounts back in the Bahamas. These transactions were contrived to evade the usual examination affiliated with cross-border payments, playing a well-calculated cat and mouse game with financial regulators. What’s noteworthy though is that such proceedings occur in the context of a regulation-demanding environment where most US operating banks mandate KYC (Know Your Customer) protocols. But in this case, law enforcement officials couldn’t pinpoint registered agents, business locations, or even the business purpose of the aforementioned companies.
With such intriguing developments, it’s unavoidable to pose the question: are these just isolated incidents or a tiny peek into the murky, under-regulated underbelly of the crypto world? This may indeed be indicative of the need for more robust regulatory oversight in the crypto world to avoid such large-scale scams and fraudulent activities. In the long run, such regulatory pressures may be the acid test leading to a mature, safer environment for crypto enthusiasts and financially secure futures.
Source: Cryptonews
