The recent seizure of many corporate accounts held by Deltec Bank, a Bahamian bank with links to businesses engaged in the cryptocurrency industry, by the U.S. Secret Service is a major development. According to federal court filings that were previously secret, the Secret Service seized multiple Deltec-owned U.S. bank accounts worth more than $58 million last month.
The seizure was made as part of an investigation into organized, worldwide money-laundering gangs that were allegedly engaged in wire fraud schemes and other schemes involving the purchase of cryptocurrencies. The targeted bank accounts were custodial accounts that Deltec had created at Mitsubushi Bank UFJ Trust in New York on behalf of its business customers.
Authorities in the United States established a connection between a few Bahamian bank clients and fictitious businesses involved in an international fraud operation. According to reports, the complex plan included building phony cryptocurrency websites to trick victims into surrendering their possessions or money.
At least 74 shell corporations that participated in this global fraud operation were discovered by the U.S. law enforcement agency, according to an affidavit submitted in the Eastern District of Virginia. As these monies were moved to accounts in the Bahamas, authorities were able to follow them.
With promises of significant profits on their deposits in fictitious accounts, the fraud operation enticed victims. The phony cryptocurrency websites would show rising account balances to persuade users to add more money, but no withdrawals were ever made from these accounts.
Since the Bahamian bank was unable to provide the essential information, Mitsubushi Bank informed the authorities about the accounts Deltec had on behalf of the fictitious firms Axis Digital Limited and GTAL. The shell businesses received money via wire fraud, moved it to custodial accounts with Deltec, and then sent the money to other accounts in the Bahamas, according to evidence discovered by the Secret Service. The businesses set up these wire transactions in a way that avoided the regular scrutiny given to international payments.
According to U.S. authorities, in order to establish accounts, banks that operate inside the country are obliged to follow KYC (Know Your Customer) laws. Law enforcement officials, however, were unable to locate registered agents, company sites, or business objectives in the cases of Axis Digital Limited and GTAL.
Deltec’s accounts were seized after an investigation, which shows that U.S. officials are making a determined effort to stop cryptocurrency-related international fraud operations. More information on the scope of the fraudulent activities and the participation of other participants in the scheme may become available as the case develops.
