Stablecoin giant Tether falsified documents that were provided to its banking partners, according to reporting from the Wall Street Journal (WSJ).
The company is also reportedly under investigation by the Department of Justice (DoJ) for bank fraud.
Phil Potter, then chief strategy officer of both Bitfinex and Tether, described in a Whalepool call shortly after Wells Fargo cut them off in 2017 that they frequently have to use “cat and mouse” games. He noted that correspondent banks would cut them off when they learned they were dealing with bitcoin.
One of the reported shareholders of Tether Holdings Limited, Stephen Moore was reportedly responsible for signing a series of fake invoices and contracts, which were being used to hide the fact that these were actually deposits and withdrawals related to Tether.
During an email conversation with an important Tether trader in China, he reportedly recommended they abandon the plan, because he “would not want to argue any of the above in a potential fraud/money laundering case.”
One important Tether trader and shareholder based in China, Zhao Dong of RenrenBit, was found guilty of money laundering in China after this conversation.
The New York Attorney General’s case against Bitfinex and Tether previously detailed how they would rely on ‘friends of Bitfinex‘ (executives who were friendly with Bitfinex) who used their accounts to provide withdrawals for the firm.
The report reveals how Tether and Bitfinex also relied on opening accounts that were controlled by other people. One was reportedly opened by Chrise Lee who runs Hylab Technology, a company that makes set-top boxes. The account was apparently opened under the name of the similar Hylab Holdings and was held in trust for Tether.
Jean Louis van der Velde, also known as Jean Ludovidicus van der Velde, CEO for Bitfinex and Tether, claims in his Bitfinex biography that he was at the “center in the early development of a number of key technologies,” including “embedded systems, video streaming, IPTV, digital TV.”
Giancarlo Devasini, Tether and Bitfinex’s chief financial officer, reportedly imported set-top TV boxes in his previous businesses.
Previous reporting has also revealed that around this same time, Stuart Hoegner, general counsel for Bitfinex and Tether, held funds for Tether in his account at the Bank of Montreal.
One of the other accounts reportedly created for use by Tether and Bitfinex was opened in the name of ‘Denix Royal Dis Ticaret Limited Sirketi’ and was allegedly used to launder money for the Hamas Izz ad-Din al-Qassam Brigades. This scheme reportedly involved a business that had an account at Bitfinex. DoJ comments have previously stated that the exchanges involved in disrupting this network were fully cooperative.
At a time when Bitfinex and Tether were struggling so intensely to maintain access to banking, they also relied on payments processors like Crypto Capital Corp. The two companies would eventually give over $1 billion in commingled client and corporate funds to Crypto Capital Corp, the majority of which have been seized.
After Signature Bank rejected Bitfinex and Tether, Signature received outreach from a company called AML Global, a broker who dealt in aviation fuel.
AML Global was owned and controlled by Christopher Harborne, also known as Chakrit Sakunkrit. Harborne was a shareholder in the parent company of Bitfinex and Tether. Signature was told that the account would be controlled by Harborne and would be used for him to trade cryptocurrency on Kraken. This account was reportedly opened and then closed by Signature once it realized the account was being used for Bitfinex.
As Protos detailed in the Tether Papers investigation, Harborne was issued in excess of $70 million tethers.
Christopher Harborne is also the father of Will Harborne, CEO of DeversiFi — formerly EthFinex — a Bitfinex sister company that was eventually spun out.
Harborne was the largest donor to the Reform UK party which led the Brexit push and has made a large donation to former prime minister Boris Johnson. He’s also been very active in investing in military contractors, including QinetiQ which is developing laser weapons technology.
Tether has claimed in a public statement that the report is “about stale allegations from long ago” and that it is “wholly inaccurate and misleading.”