U.S. prosecutors are seeking a lengthy prison sentence for an executive in a five-year-old crypto shadow banking case. On April 18, U.S. District Attorney Damian Williams filed a request to advance Reginald Fowler's scheduled April 20 sentencing.
Fowler, a former minority owner of the Minnesota Vikings NFL team, was originally arrested in 2019 and charged with bank fraud, illegal money transmission and conspiracy related to shadow banking for allegedly operating an unlicensed money transmission business. On behalf of the government, Williams is demanding a minimum sentence of seven years in prison. However, he suggested a range of 15 to 20 years to reflect the severity of the crime.
Fowler founded a company called Global Trading Solutions (GTS), a so-called crypto shadow bank, in 2018 under the umbrella of Panama-based Crypto Capital Corp. He is accused of acting as an unlicensed money transmitter and defrauding financial institutions. Through Crypto Capital, he allegedly provided shadow banking services to several crypto exchanges, including Bitfinex, Binance, CEX.io, and QuadrigaCX.
Between February 2018 and October 2018, GTS and Crypto Capital processed roughly $750 million in cryptocurrency transactions, giving unlicensed crypto firms illegal access to the U.S. banking system, the filings show. The head of Crypto Capital, Ivan Manuel Molina Lee, was arrested in 2019 on suspicion of money laundering and involvement in a Colombian drug cartel.
Crypto Capital is a key player in a court case over Bitfinex’s failure to disclose the loss of $850 million in customer funds. The case was settled in February 2022, and the firm was ordered to pay an $18.5 million civil penalty and close its trading operations in New York. In 2020, Fowler pleaded not guilty to all charges and was released on $5 million bond, however, he changed his plea in April 2022. As Fowler's sentencing approached, Williams concluded:
"Reginald Fowler committed serious crimes. Only a substantial prison term, a minimum of 84 months, could reflect this seriousness, promote respect for the law, and provide an adequate deterrent. In September 2022, Fowler requested a six-month adjournment, citing serious illness.
