Bitcoin Up 30% YTD | Genesis Files For Bankruptcy

TETHER’S BANK FORGED A LUCRATIVE RELATIONSHIP WITH FTX

In late 2021, Bahamian bank Deltec was well on its way to becoming one of the world’s most consequential crypto banks—but it needed money. Born from private wealth management, the bank found a profitable, yet risky new role as the banker of choice for crypto giants. After signing on Tether, a wildly popular stablecoin that had been dropped by traditional financiers, Deltec amassed a roster of white-hot clients, including FTX.

Amid the dollar signs surrounding his new client, Deltec chairman Jean Chalopin saw an answer to his funding woes. In October 2021, he secured a $50 million loan from an entity connected to FTX through one of its executives; the entity’s ties to FTX and its loan to Deltec have not been previously reported. In addition to the loan to Deltec, Alameda invested in Moonstone Bank, owned by Chalopin through a holding company. In a December court filing, Bahamas liquidators revealed the Washington state bank held nearly $50 million in FTX funds across two accounts, appearing to make the exchange its largest customer, and Alameda its largest investor. Read more here.

This week, Moonstone began notifying crypto clients it plans to close their accounts. According to interviews and documentation provided to Forbes by individuals associated with Moonstone, the bank had several dozen crypto customers as of this month. It’s unclear how many of those clients were told their accounts would be terminated.

Source: Forbes Digital Assets, powered by Nomics.  Prices as of 4:00 p.m. on January 20, 2023.

FOUNDER OF CRYPTO EXCHANGE BITZLATO ARRESTED IN $700 MILLION LAUNDERING SCHEME

The United States Justice Department announced on Wednesday it charged the founder and majority owner of Hong Kong-registered exchange Bitzlato with unlicensed money transmitting as the exchange facilitated over $700 million worth of illicit funds. Anatoly Legkodymov was arrested in Miami last night following a “years-long” joint investigation by the department of justice, the Treasury Department’s Financial Crimes Enforcement Network and French authorities, according to a press release.

The Hong Kong-registered exchange marketed itself as a peer-to-peer custodial crypto exchange that allowed customers to exchange and trade 60 supported cryptocurrencies with “no middle-man.” The charges allege that the exchange required only minimal identification from users, with “neither selfies nor passports” required. In doing so, it became a safe haven for criminals looking to store their cryptocurrency with few, if any, know-your-customer (KYC) procedures. Bitzlato’s biggest counterpart, the charges allege, was the Hydra Market, a Russian dark-web used for the sale of illegal drugs, stolen financial information and money laundering services. Hydra Market users used Bitzlato until the market's seizure by authorities in April 2022.

ELSEWHERE

New FTX Chief Says Crypto Exchange Could Restart [The Wall Street Journal]

SEC Charges Trader Over Alleged $116 Million Mango Crypto Scam [Bloomberg]

Nexo Pays $45 Million To Settle SEC And State Charges For Failing To Register Lending Product [The Block] 

Nina Bambysheva
Reporter
Forbes Money & Markets

Steven Ehrlich
Editor 
Forbes CryptoAsset & Blockchain Advisor

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