Reginald Fowler, a former minority owner of the Minnesota Vikings, has pleaded guilty to fraud over his involvement in opening and operating bank accounts for cryptocurrency companies. 

While working for the Panama-based Crypto Capital, Fowler allegedly helped exchanges get banking services when few financial institutions would take them on as customers. But by doing so, he also enabled them to bypass money-laundering regulations, according to the charges.

Founded in 2013, Crypto Capital wasn't your typical bank. Like other parts of crypto, its operators were more or less anonymous. The operation worked by opening accounts for crypto clients using the name of shell companies at international banks. When a bank would get wise that the account might actually be being used for a cryptocurrency business, Crypto Capital would move on to the next one. 

Kraken, Binance, and other reputable firms used Crypto Capital at one point or another. So, too, did QuadrigaCX, a Canadian exchange that lost millions in customer funds when its password-holding founder died mysteriously in December 2018.

But Crypto Capital's biggest customer was Bitfinex, the sister exchange to the stablecoin issuer Tether. 

The whack-a-mole operation took a direct hit in October 2018 when Bitfinex was unable to access $850 million being held by Crypto Capital. The exchange temporarily paused cash deposits, with users reporting delays with withdrawals. To handle the crypto shortage, Bitfinex allegedly borrowed the funds from Tether—which is run by the same parent company as Bitfinex, iFinex.

Not long after, the New York Attorney General's Office opened an investigation into Bitfinex and Tether, the latter of which claimed to be backstopped by cash. The Attorney General said this co-mingling of funds amounted to fraud and, further, that Tether's claims that its stablecoin was backed by cash were false. Tether ultimately settled in February 2021 for $18.5 million and an agreement to cease operations in the state, though it did not admit wrongdoing. Since the investigation, it's also revealed that its reserves include assets besides cash.

Crypto Capital, for its part, claimed the $850 million was unavailable because American, Polish, and Portuguese officials had frozen its accounts.

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The story of Crypto Capital’s dark past and its deep ties with the crypto industry

Crypto Capital is slowly emerging as the central bank of the crypto industry. It facilitated banking services from one end of the industry—major crypto businesses and exchanges including Binance, Kraken and BitMEX—to the other, including the now-defunct QuadrigaCX and a number of smaller companies implicated in money-laundering schemes and fraud. And according to the the New York Attorney General, it still serves crypto exchange Bitfinex, where by the end of 2018, it was managing more than $1 bi...

Fowler had capital, though. According to the U.S. government, he and Ravid Yosef—another alleged operator of Crypto Capital—held $345 million spread out across 60 bank accounts. 

It's been an up-and-down case for Fowler, who entered a plea deal in 2020 that would have seen him admit only to operating as an unlicensed money transmitter. But the $371 million fine was too much, and Fowler withdrew from the deal. In response, the U.S. added wire fraud to the list of charges. 

With the trial set to begin in mid-May, Fowler acquiesced again, this time pleading guilty not only to an unlicensed money transmitter charge but also to wire fraud and conspiracy to commit bank fraud. 

As part of the "open" plea, Fowler has not yet been sentenced.