U.S. Federal Charges Target Illicit Crypto-Linked Financial Activities
The U.S. Attorney for the Southern District of New York, in collaboration with the Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS), has formally charged Reginald Fowler, a U.S. citizen, in connection with an alleged unlicensed money transmitting operation and bank fraud. His Israeli associate, Ravid Yosef, has also been charged with bank fraud and remains a fugitive.
According to the indictment, Fowler and Yosef allegedly operated an informal financial network—often referred to as a “shadow bank”—processing hundreds of millions of dollars in transactions on behalf of cryptocurrency exchanges. Authorities state that their operations circumvented anti-money laundering regulations and licensing requirements designed to protect the integrity of the U.S. financial system.
“Fowler and Yosef are alleged to have misrepresented the purpose of accounts and moved funds without proper oversight, exposing the banking system to risk,” said U.S. Attorney Geoffrey S. Berman in a press release issued on April 30, 2019.
Fraud Through Misrepresentation
The two individuals reportedly worked for multiple interrelated companies that offered fiat-based financial services to cryptocurrency exchanges (collectively, the “Crypto Companies”). Prosecutors allege that Fowler submitted misleading and false documentation when opening accounts at U.S. banks, claiming they would be used for real estate-related transactions.
However, these accounts were allegedly used to facilitate high-volume cryptocurrency-related payments. To obscure the true nature of these activities, Fowler and Yosef are accused of manipulating wire instructions and concealing the origin and purpose of the funds.
According to the indictment:
“The defendants executed and attempted to execute a scheme to obtain funds under false and fraudulent pretenses… knowingly opening U.S. bank accounts for the transmission of funds on behalf of an unlicensed money transmitting operation related to cryptocurrency exchanges.”
Implications for Unregulated PSPs and Fraudulent Broker Networks
The legal action against Fowler and Yosef has broader implications. Numerous payment service providers (PSPs) and unlicensed money transmitters have been involved in similar activities, particularly in relation to binary options and forex trading platforms such as:
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Option888
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XTraderFX
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SafeMarkets
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BlueTrading
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StoxMarket
These platforms allegedly relied on unregulated PSPs that knowingly misrepresented their business operations to open and manage banking relationships. By enabling the flow of funds between investors and fraudulent broker platforms, these PSPs have been identified as integral participants in broader schemes involving investor deception and international money laundering.
Legal Accountability and Financial Liability
U.S. prosecutors argue that PSPs engaged in such practices should not only be investigated but also held legally accountable. Their role in supporting illegal broker activities positions them as contributors to investment fraud and money laundering. As such, they may face criminal charges and be required to compensate defrauded investors.
These developments affirm broader calls for increased oversight of payment service providers and highlight the potential risks associated with unlicensed money transmission in the cryptocurrency space.