Federal authorities in the US have recently executed multiple seizure warrants for accounts held by Deltec Bank, a Bahamian bank associated with digital asset firms. Documents unsealed in federal court on Monday revealed that the U.S. Secret Service conducted seizures of funds from U.S. bank accounts controlled by Deltec last month. The seizures were based on probable cause related to wire fraud, bank fraud, or money laundering.
According to an affidavit, law enforcement has been investigating organized international criminal money laundering syndicates that operate cryptocurrency investment and wire fraud scams. The victims of these scams were deceived into transferring money into shell companies. Subsequently, the funds were subjected to a series of transfers, ultimately ending up overseas, with the intention of concealing the origin, nature, ownership, and control of the funds.
The U.S. Secret Service had the authority to seize up to $58.5 million, and the seizures were conducted on June 13 and June 15. While the accounts subject to the seizure warrants were custodial accounts opened by Deltec on behalf of corporate clients, they were held with another bank, Mitsubishi Bank UFJ Trust in New York.
US seizure warrants
According to the Secret Service, the customers whose funds were held by Deltec were associated with shell companies that played a central role in an international fraud scheme. This scheme involved the creation of counterfeit crypto websites to deceive victims into depositing their digital assets or cash into accounts, believing it to be an investment opportunity. The victims were falsely promised substantial returns on their investments. The spoofed websites displayed fake increases in the victims’ account balances to entice additional deposits, but victims were unable to make withdrawals.
Mitsubishi Bank became suspicious of the accounts maintained by Deltec on behalf of Axis Digital Limited and GTAL, the shell companies involved, when they were unable to obtain 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. From there, the funds were transmitted to other accounts in the Bahamas, with the transfers structured to avoid the usual scrutiny applied to international wire transfers.
The affidavit notes that banks operating in the United States are legally obligated to maintain Know-Your-Customer information regarding their customers. However, law enforcement has been unable to identify the registered agents, business locations, or business purposes of Axis Digital Limited and GTAL.
As of Monday, attorneys for the U.S. government no longer had concerns about making the seizure warrants public. This development sheds light on the ongoing efforts by law enforcement agencies to combat fraudulent activities in the cryptocurrency space and protect potential victims from falling prey to such scams.
