US law enforcement seizes tens of millions from Deltec-tied accounts

Quick Take

  • The accounts controlled by Deltec Bank were custodial accounts for corporate clients that U.S. authorities allege were involved in a major fraud ring centered around digital assets. 

Federal authorities in the U.S. executed multiple seizure warrants for accounts belonging to Deltec Bank, a Bahamian bank with ties to digital asset firms.

According to documents unsealed in federal court on Monday, the U.S. Secret Service executed multiple seizures of funds from U.S. bank accounts controlled by Deltec last month, citing probable cause for wire fraud, bank fraud, or money laundering.

“Law enforcement has been investigating organized, international criminal money laundering syndicates operating cryptocurrency investment and other wire fraud scams,” the affidavit reads. “Victims were fraudulently induced to transfer money into shell companies, at which point the money underwent a series of transfers, generally ending overseas, designed to conceal the source, nature, ownership, and control of the funds.”

The Secret Service was authorized to seize up to $58.5 million, and the seizures took place on June 13 and June 15, according to the affidavit. The accounts that were subject to the seizure warrants were custodial accounts with another bank, Mitsubushi Bank UFJ Trust in New York, but opened by Deltec on behalf of corporate clients.

International fraud scheme

The Secret Service alleges that the customers whose funds Deltec held there were shell companies at the heart of an international fraud scheme involving the faking of crypto sites in order to trick victims into depositing their digital assets or cash into accounts, believing that they invested it.

As part of the scheme to invest, the victims are further told that they can expect to make a sizable return on their investments,” an affidavit from the Secret Service reads. The spoofed websites would display an increase in the victim’s account balance in order to coerce more deposits, but victims could not make any withdrawals.

Mitsubushi Bank flagged the accounts Deltec kept with them on behalf of those shell companies, Axis DigitalLimited and GTAL, after they could not obtain information on the companies from Deltec. Federal law enforcement identified allege at least 74 shell companies received wire fraud proceeds and transferred them to one of the custodial accounts, which then transmitted them to other accounts in the Bahamas “and structured the transfers in such a way as to avoid scrutiny that typically applies to international wire transfers.”

“By law, banks operating in the United States are required to keep such Know-Your-Customer information regarding their customers. Law enforcement has also not yet been able to identify the registered agents, business locations, or business purposes of Axis DigitalLimited and GTAL,” the affidavit states.

Attorneys for the U.S. government no longer had concerns about making public the seizure warrants public as of Monday.

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