Bitfinex connected to HSBC account involved in bank fraud case, reveals US Department of Justice

The Bitfinex-Tether episode witnessed another twist in the tale after the United States Department of Justice revealed that a part of the $850 million connected to Bitfinex’s alleged losses was in its hands.

An indictment released by the feds stated that funds from an HSBC bank account were used to commit bank frauds by transacting US Dollars between customers of cryptocurrency exchanges. The reason why Bitfinex is in the picture is that the cryptocurrency exchange used the same account to transfer money to its customers when Wells Fargo declined to do business with it.

The bank account was flagged by the governing body and individuals involved in the misuse of the account were charged on four counts. The charges were: conspiracy to commit bank fraud, bank fraud, conspiracy to operate an unlicensed money transmitting business and operation of an unlicensed money transmitting business.

The individuals were also subject to a violation of the Overt Act,

“On or about August 9,2018, Fowler opened a bank account with a bank in Manhattan, New York for the purpose of conducting an unlicensed money transmitting business.”

HSBC account number 141000147 was identified by the feds as being the same account number Bitfinex quoted in October 2018, directing customers to send money to the account. It was then identified as being owned by Global Trading Solution LLC. Stuart Hoegner, Bitfinex’s General Counsel, in a filing before the New York State Supreme Court, said,

“…the foregoing terms cannot be legitimately reconciled with OAG’s claim that Bitfinex simply offloaded its potential liability onto Tether. Moreover, through the provision of a line of credit to Bitfinex, the companies have ensured that the market has continued to have uninterrupted access to liquid funds through the Bitfinex virtual currency exchange. In his way, OAG’s demand that Bitfinex is enjoined from drawing upon the line of credit pending the completion of OAG’s investigation cannot be seen to protect legitimate traders on the platform.”

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