Former Payza CEO convicted of money laundering is suing Blockchain.com over blocked bitcoin transfer

Quick Take

  • Firoz Patel is seeking an injunction to force through the transfer of a stash of 450 bitcoin.
  • Patel and his brother were convicted of money laundering charges by the Department of Justice in November 2020.

Firoz Patel, the former co-founder and CEO of Payza who was convicted of money laundering charges last year, is suing London-based crypto firm Blockchain.com.

The lawsuit, filed in the United Kingdom’s High Court of Justice on June 23, concerns a cache of 450 bitcoin – about $20.4 million at today’s prices – held in Patel's Blockchain.com account.

In March 2018, the United States Department of Justice charged Payza and its co-founders, brothers Firoz and Ferhan Patel, with running an unlicensed money services business, accusing them of processing more than $250 million of proceeds from Ponzi schemes and other criminal enterprises.

The Patel brothers took plea deals in November 2020, forfeiting $4.5 million and agreeing to serve prison sentences – three years in Firoz’s case. His brother Ferhan received an 18-month sentence. 

Blocked chain

In the High Court filing in June, Patel claims that his requests to transfer the bitcoin stash to a specific bitcoin address have been ignored by Blockchain.com, despite early indications that they would be complied with – which he claims represents a breach of contract. He is seeking an injunction to force the transfer through.

Patel further claims he suffered a loss of around $9.3 million because the price of bitcoin fell sharply between May and June, when the lawsuit was filed – and so is seeking damages equal to that sum or more.

“This is a fast-paced area of the law that involves highly valuable assets often across multiple jurisdictions. We continue to pursue our clients’ interests to protect and recover cryptocurrency,” said Leo Nabarro, a partner at Candey, the law firm representing Patel.

It is not clear why Blockchain.com denied the transfer request, and the filing notes that no explanation has been offered to Patel by the exchange. The company is yet to file its defense and had no immediate comment when reached by The Block.

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