Reginald Fowler, a lead figure in defunct shadow bank Crypto Capital Corp, will finally face charges of alleged bank fraud in February next year.
News of Fowler’s next court date broke earlier this month, but the warped tale of the Panamanian shell — which maintained ties to multiple crypto companies including Tether and Bitfinex — stretches back eight years.
Back then, Bitcoin was worth less than $1,000, seminal exchange Mt. Gox was folding after losing nearly one million BTC, and Ethereum’s Vitalik Buterin had just tried to raise money to mine crypto with quantum computing.
Crypto Capital Corp, the beginning
It’s 2013 and Ivan Manuel Molina Lee, a Canadian-Panamanian with a thorough understanding of offshore incorporation, has an idea: a shadow bank for cryptocurrency companies.
Shadow banks operate similarly to regular banks. They offer loans, custody, and general asset management — except they exist outside traditional finance and its pesky regulations.
At face value, Lee’s is a simple proposition: handle cash and process payments for crypto startups that struggle to find banks willing to work with the nascent digital asset sector.
In reality, building a shadow bank for crypto requires connections, capital, and other people with gray morals and ethics.
And so, after apparently running the show on a skeleton crew for years, Lee brought in allies Fowler and Israeli entrepreneur Oz Yosef to help run Crypto Capital Corp in late 2017.
Fowler bit more ball than he could chew
Long before crypto, “Reggie” Fowler was a United States Football League (USFL) player. USFL was a short-lived competitor to the National Football League (NFL) that ran from 1983 to 1985.
Fowler became a part-owner of the Minnesota Vikings in a 2005 deal plagued with problems (he missed reporting deadlines and defaulted on financial obligations multiple times).
Fowler later relinquished his ownership share of the multi-billion dollar NFL franchise in 2014. He’d been bought out, having faced tens of millions of dollars in debt.
In 2019, Fowler led investment in the Alliance of American Football (AAF). AAF folded part-way through its first season — mainly due to Fowler defaulting on payments once again.
It’s worth noting that Fowler allegedly took funds from Crypto Capital Corp clients to invest in the football league he was helping to found, according to his court docs.
Fewer details are available of Yosef, the Israeli entrepreneur living in Panama at the time of Crypto Capital Corp’s inception.
We do know that Yosef is familiar with offshore incorporation. They’ve historically served in over a dozen different roles for a raft of offshore companies across Panama and the US.
Major crypto exchanges pile in
By 2017 (four years after incorporation), Crypto Capital Corp is the go-to shadow bank for many prominent cryptocurrency exchanges.
An archived copy of Crypto Capital Corp’s website markets the firm by promising that users could “deposit and withdraw fiat funds instantly to any crypto exchange around the world,” in all caps.
But that role is short-lived. In late 2018 to early 2019, many exchanges (including Kraken and most famously QuadrigaCX) notice serious red flags and withdrawal delays.
QuadrigaCX users were unable to access their funds while Bitfinex customers complained on Reddit and other public forums about withdrawals held up for weeks or months at a time.
Turns out, those withdrawal issues were exacerbated by international authorities freezing $850 million worth of Crypto Capital Corp funds over alleged ties to a global crime syndicate.
According to the New York Attorney General’s office (NYAG), the $850 million in question belonged to Bitfinex.
Bitfinex covered up Crypto Capital Corp losses
NYAG fined Bitfinex $18.5 million earlier this year for commingling client funds with its own in a bid to cover up the Crypto Capital Corp incident.
And in response to losing nearly a billion dollars, Bitfinex launched a utility token, UNUS SED LEO, in May 2019.
The idea was to raise cash from investors to help keep Bitfinex afloat. The exchange promised to eventually buy back the tokens, however significant amounts still circulate through the ecosystem.
Pundits often highlight the successful UNUS SED LEO sale as proof that the crypto sector believes in and wants Bitfinex to survive at all costs.
In any case, arrests of Crypto Capital Corp insiders started in 2019 (six years after incorporation). First, the US took down Fowler in April of that year over alleged bank fraud.
Around the same time, founder Lee was captured in Greece and later extradited to Poland to face criminal charges. Lee remains in Polish prison.
Curiously, Crypto Capital Corp’s website remained online until February of this year despite formally dissolving at the end of 2020.
Today, Fowler is out on bail in the US. Two alleged criminals associated with Crypto Capital Corp — brother and sister Oz and Ravid Yosef — remain at large.
Where in the world is Ravid Yosef?
It appears Ravid began to work with her brother at Crypto Capital Corp in 2017. Public Google data showed Ravid travelling far and wide, from Panama to Colombia, Israel to England, and Russia to the Dominican Republic.
Ravid’s Google reviews were switched to private after the Department of Justice named her in a press release over a multitude of crimes in April 2019, including bank fraud.
Ravid’s trail then went cold. That was until July 2021, when reports surfaced of an international money laundering crackdown in the UK.
Police arrested a 39-year-old woman (a foreign national) with $250 million in cryptocurrency on suspicion of money laundering.
Unlike in the US, English law doesn’t allow authorities to name individuals before they’re charged. So, no one is sure if that woman is Ravid, but the description does line up.
If it’s indeed Ravid, that would mean only one Crypto Capital Corp associate remains: her brother Oz, whose whereabouts are unknown.
As for Fowler, he’s set to appear in court on February 22, 2022. His legal team reportedly attempted to negotiate a plea deal, which was rejected.
Fowler’s trial is expected to attract major attention from crypto insiders and onlookers alike.
No doubt, the entire ecosystem is eager to learn how US authorities prosecute crypto’s premiere shadow bank, especially given the regulatory pressure imposed by the Biden administration in recent months.
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Update 18:25 UTC, Aug 17: Included more context about Fowler and AAF at paragraph 13 (H/T: Bennett Tomlin).