Bitfinex has denied accusations of money laundering and claimed that it was a “victim of fraud” after the president of Crypto Capital was arrested in Greece yesterday.
Ivan Manuel Molina Lee was arrested in Greece and extradited to the Polish capital of Warsaw yesterday, where he has been charged with being part of an international drug cartel and money-laundering operation that allegedly siphoned funds between South America and Europe. Crypto Capital has been described as a “shadow bank” at the center of a fraud investigation into Bitfinex and its sister company Tether, both of which are controlled by parent company iFinex.
The arrest comes just days after Bitfinex filed an application for discovery in an attempt to recover a “missing” $880 million USD held by Crypto Capital. The subpoena filing notes that Crypto Capital “provided services as a payment processor to [iFinex], transferring funds to and from [iFinex] and its customers,” since 2014. However, since December of last year, Crypto Capital has failed to remit the funds, claiming its bank accounts in Poland, Portugal, the United Kingdom, and the United States had been seized or frozen by the various authorities.
In a statement today, Bitfinex has moved to distance itself from Crypto Capital, arguing that the exchange was a victim itself. Bitfinex says that any claims that Crypto Capital laundered funds on behalf of the exchange are “categorically false.” Further, in the statement, the exchange said that these developments will not deter it from recovering the missing $880 million USD.
More Controversy for Bitfinex
The arrest of Lee is an unusual turn of events in the ongoing controversy regarding Bitfinex and Tether. Both companies are accused of creating “the largest bubble in human history” in a lawsuit filed in New York last month, which claims the companies manipulated the crypto market out of $1.4 trillion USD. The suit’s allegations center around long-standing claims that Tether essentially printed billions of dollars worth of tokens to artificially inflate prices and convince investors that demand was far greater than in actuality.
It is difficult to judge just how aware Bitfinex was of the shady ongoings at Crypto Capital, or if the exchange will ever recover the missing millions, but it will be interesting to see how this develops over the coming weeks.
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