Deltec Bank, a Bahamian bank associated with digital asset firms, had its accounts linked to corporate clients seized by U.S. authorities due to their alleged involvement in a significant fraud ring related to digital assets.
According to recently unsealed court documents, the U.S. Secret Service executed multiple seizure warrants last month for funds held in U.S. bank accounts controlled by Deltec. The warrants were issued on grounds of probable cause for wire fraud, bank fraud, or money laundering.
The investigations targeted organized international criminal syndicates engaged in cryptocurrency investment and other wire fraud scams. The fraudulent schemes involved persuading victims to transfer funds to shell companies, which were then subjected to a series of transfers, often concluding overseas, to obscure the funds’ origin, nature, ownership, and control.
Authorized to seize up to $58.5 million, the U.S. Secret Service conducted the seizures on June 13 and June 15. The accounts subjected to the seizure warrants were custodial accounts held with another bank, Mitsubushi Bank UFJ Trust in New York, but were opened by Deltec on behalf of their corporate clients. This is a similar case to Bittrex company who were in trouble with SEC for operating an unregistered exchange
International fraud scheme
The U.S. Secret Service alleges that Deltec Bank held funds for customers who were actually shell companies involved in an international fraud scheme. The scheme revolved around creating fake cryptocurrency websites to deceive victims into depositing their digital assets or cash, believing they were making investments with potential for significant returns.
According to an affidavit from the Secret Service, the spoofed websites displayed inflated account balances to entice victims into making further deposits, but victims were unable to withdraw any funds.
Mitsubishi Bank became suspicious of the accounts held by Deltec on behalf of shell companies Axis Digital Limited and GTAL when they failed to obtain necessary information about these companies from Deltec. Federal law enforcement authorities identified at least 74 shell companies that received proceeds from wire fraud and transferred them to one of the custodial accounts, which then facilitated transfers to other accounts in the Bahamas. These transfers were structured in a way to avoid typical scrutiny applied to international wire transfers.
The affidavit further states that banks operating in the United States are legally obligated to maintain Know-Your-Customer information about their customers, but in this case, the registered agents, business locations, and business purposes of Axis Digital Limited and GTAL remain unidentified by law enforcement.
As of Monday, the attorneys for the U.S. government no longer had concerns about making the seizure warrants public.